CORPO PART C

Related topics:

1.
1.
1. Private Corporations
a. Formation or creation
b. Powers
i. Express
ii. Implied
iii. Incidental
iv. Ratification
v. Ultra-vires vs. Void
c. Stock
d. Non-stock
e. Other Special Kinds
f. Composition
g. Articles of Incorporation
i. Nature
ii. Adoption
iii. Amendment
h. By-laws
i. Nature
ii. Adoption
iii. Amendment
iv. Binding third persons
i. Incorporators
j. Amount of Capital Stock to be prescribed or paid-up
k. When corporate existence commences
l. Corporate books and records
i. Minutes
ii. Accounts
iii. Stock and Transfer Book
2. Stock or Share Corporations
a. Doctrine of Equality of Shares
b. Trust Fund Doctrine
i. Restricted Retained Earnings
ii. Unrestricted Retained Earnings
c. Capital
d. Capital Stock
e. Authorized Capital Stock
f. Share of Stock
g. Subscribed Capital
 h. Paid-up Capital
i. Pre-emptive Right
j. Increase or decrease of Capital Stock
k. Subscription contract
l. Consideration for stocks
m. Certificate of stocks and transfer of shares
n. Liability for watered stocks
o. Balance of subscription and delinquency sale
3.  Classification of Stock
a. Par and Non-par
b. Voting
i. Founder's
ii. Common
iii. "Voting Trust Agreemet"
c. Non-voting
i. Preferred
ii. Redeemable
iii. Treasury
d. Promotion
e. Escrow
f. Over-issued
g. Watered
4. Rights of Stockholders
a. Management
i. Indirect
1. To vote directors
2. To remove directors
ii. Direct
1. To give approval to certain corporate actions
b. Proprietary
i. Appraisal
ii. Issuance of Stock Certificate
iii. To proportionately participate in the distribution of
assets during liquidation
iv. To transfer stocks
v. Pre-emptive or First Refusal
vi. To inspect books and records
vii. To financial statements
viii. To recover stocks unlawfully sold to delinquent
payment of subscription
ix. To commence suits
c. Remedial
i. Individual
ii. Representative
iii. Derivative
d. Dividends
i. Dividends vs. Profits
ii. When and how issued
iii. Kinds
1. Cash
2. Stock
3. Property
5. Board of Directors, Trustees and Officers
a. Meetings
b. Board
c. Corporate officers
d. Compensation, liability and dealings

Section 6. Classification of Shares. - The classification of shares, their corresponding

rights, priviledges, restrictions, and their stated par value, if any, must be indicated in
the articles of incorporations. Each share shall be equal in all respects to every other
share, except as otherwise provided in the articles of incorporation. Each share shall be
equal in all respects to every other share, except as otherwise provided in the articles of
incorporation and in the certificate of stock.

The share stock corporations may be divided into classes or series of shares, or both.
No share may be deprived of voting rights except those classified and issued as
"preferred" or "redeemable" shares, unless otherwise provided in this
Code: Provided, That there shall be a class or series of shares with complete voting
rights.

Holders of nonvoting shares shall nevertheless be entitled to vote on the following

matters;

(a) Amendment of the articles of incorporation;

(b) Adoption and amendment of bylaws;

(c) Sale, lease, exchange, mortgage, pledge, or other disposition of all or

substantially all of the corporate property;

(d) Incurring, creating, or increasing bonded indebtedness;

(e) Increase or decrease of authorized capital stock;

(f) Merger or consolidation of the corporation with another corporation or other

corporations;
 (g) Investment of corporate funds in another corporation or business in
accordance with this Code; and

(h) Dissolution of the corporation.

Except as provided in the immediately preceding paragraph, the vote required under
this Code to approve a particular corporate act shall be deemed to refer only to stocks
with voting rights.

The shares or series of shares may or may not have a par value: Provided, That banks,
trust, insurance, and preneed companies, public utilities, building and loan associations,
and other corporations authorized to obtain or access funds from the public whether
publicly listed or not, shall not be permitted to issue no-par value shares of stock.

Preferred shares of stock issued by a corporation may be given preference in the

distribution of dividends and in the distribution of corporate assets in case of liquidation,
or such other preferences: Provided, That preferred shares of stock may be issued only
with a stated par value. The board of directors, where authorized in the articles of
incorporation, may fix the terms and conditions of preferred shares of stock or any
series thereof: Provided, further, That such terms and conditions shall be effective upon
filing of a certificate thereof with the Securities and Exchange Commission, hereinafter
referred to as the "Commission".

Shares of capital stock issued without par value shall be deemed fully paid and
nonassessable and the holder of such shares shall not be liable to the corporation or to
its creditors in respect thereto: Provided, That no-par value shares must be issued for a
consideration of at least Five pesos (₱5.00) per share: Provided, further, That the entire
consideration received by the corporation for its no-par value shares shall be treated as
capital and shall not be available for distribution as dividends.

A corporation may further classify its shares for the purpose of ensuring compliance
with constitutional or legal requirements.

Section 7. Founders' Shares. - Founders' shares may be given certain rights and
privileges not enjoyed by the owners of other stock. Where the exclusive right to vote
and be voted for in the election of directors is granted, it must be for a limited period not
to exceed five (5) years from the date of incorporation: Provided, That such exclusive
right shall not be allowed if its exercise will violate Commonwealth Act No. 108,
otherwise known as the "Anti-Dummy Law"; Republic Act No. 7042, otherwise known as
the "Foreign Investments Act of 1991"; and otherwise known as "Foreign Investments
Act of 1991"; and other pertinent laws.

Section 8. Redeemable Shares. - Redeemable shares may be issued by the

corporation when expressly provided in the articles of incorporation. They are shares
which may be purchased by the corporation. They are shares which may be purchased
by the corporation from the holders of such shares upon the expiration of a fixed period,
regardless of the existence of unrestricted retained earnings in the books of the
corporation, and upon such other terms and conditions stated in the articles of
incorporation and the certificate of stock representing the shares, subject to rules and
regulations issued by the Commission.

INCORPORATION AND ORGANIZATION OF PRIVATE CORPORATIONS

Section 10. Number and Qualifications of Incorporators. - Any person, partnership,

association or corporation, singly or jointly with others but not more than fifteen (15) in
number, may organize a corporation for any lawful purpose or purposes: Provided, That
natural persons who are licensed to practice a profession, and partnerships or
associations organized for the purpose of practicing a profession, shall not be allowed
to organize as a corporation unless otherwise provided under special laws.
Incorporators who are natural persons must be of legal age.

Each incorporator of a stock corporation must own or be a subscriber to at least one (1)
share of the capital stock.

A corporation with a single stockholder is considered a One Person Corporation as

described in Title XIII, Chapter III of this Code.

Section 11. Corporate Term. - A corporation shall have perpetual existence unless its
articles of incorporation provides otherwise.

Corporations with certificates of incorporation issued prior to the effectivity of this Code
and which continue to exist shall have perpetual existence, unless the corporation, upon
a vote of its stockholders representing a majority of its articles of
incorporation: Provided, That any change in the corporate right of dissenting
stockholders in accordance with the provisions of this Code.

A corporate term for a specific period may be extended or shortened by amending the
articles of incorporation: Provided, That no extension may be made earlier than three
(3) years prior to the original or subsequent expiry date(s) unless there are justifiable
reasons for an earlier extension as may be determined by the Commission: Provided,
further, That such extension of the corporate term shall take effect only on the day
following the original or subsequent expiry date(s).

A corporation whose term has expired may apply for revival of its corporate existence,
together with all the rights and privileges under its certificate of incorporation and
subject to all of its duties, debts and liabilities existing prior to its revival. Upon approval
by the Commission, the corporation shall be deemed revived and a certificate of revival
of corporate existence shall be issued, giving it perpetual existence, unless its
application for revival provides otherwise.

No application for revival of certificate of incorporation of banks, banking and quasi-

banking institutions, preneed, insurance and trust companies, non-stock savings and
loan associations (NSSLAs), pawnshops, corporations engaged in money service
business, and other financial intermediaries shall be approved by the Commission
unless accompanied by a favorable recommendation of the appropriate government
agency.

Section 12. Minimum Capital Stock Not Required of Stock Corporations. - Stock

corporations shall not be required to have minimum capital stock, except as otherwise
specially provided by special law.

Section 13. Contents of the Articles of Incorporation. - All corporations shall file with the
Commission articles of incorporation in any of the official languages, duly signed and
acknowledged or authenticated, in such form and manner as may be allowed by the
Commission, containing substantially the following matters, except as otherwise
prescribed by this Code or by special law:

(a) The name of corporation;

(b) The specific purpose or purposes for which the corporation is being formed.
Where a corporation has more than one stated purpose, the articles of
incorporation hsall indicate the primary purpose and the secondary purpose or
purposes: Provided, That a nonstock corporation may not include a purpose
which would change or contradict its nature as such;

(c) The place where the principal office of the corporation is to be located, which
must be within the Philippines;

(d) The term for which the corporation is to exist, if the corporation has not
elected perpetual existence;

(e) The names, nationalities, and residence addresses of the incorporators;

(f) The number of directors, which shall not be more than fifteen (15) or the
number of trustees which may be more than fifteen (15);

(g) The names, nationalities, and residence addresses of persons who shall act
as directors or trustees until the first regular directors or trustees are duly elected
and qualified in accordance with this Code;

(h) If it be a stock corporation, the amount of its authorized capital stock, number
of shares into which it is divided, the par value of each, names, nationalities, and
subscribers, amount subscribed and paid by each on the subscription, and a
statement that some or all of the shares are without par value, if applicable;

(i) If it be a nonstock corporation, the amount of its capital, the names,

nationalities, and residence addresses of the contributors, and amount
contributed by each; and
 (j) Such other matters consistent with law and which the incorporators may deem
necessary and convenient.

An arbitration agreement may be provided in the articles of incorporation pursuant to

Section 181 of this Code.1âwphi1

Section 15. Amendment of Articles of Incorporation. - Unless otherwise prescribed by

this Code or by special law, and for legitimate purposes, any provision or matter stated
in the articles of incorporation may be amended by a majority vote of the board of
directors or trustees and the vote or written assent of the stockholders representing at
least two-thirds (2/3) of the outstanding capital stock, without prejudice to the appraisal
right of dissenting stockholders in accordance with the provisions of this Code. The
articles of incorporation of a nonstock corporation may be amended by the vote or
written assent of majority of the trustees and at least two-thirds (2/3) of the members.

The original and amended articles together shall contain all provisions required by law
to be set out in the articles of incorporation. Amendments to the articles shall be
indicated by underscoring the change or changes made, and a copy thereof duly
certified under oath by the corporate secretary and a majority of the directors or
trustees, with a statement that the amendments have been duly approved by the
required vote of the stockholders or members, shall be submitted to the Commission.

The amendments shall take effect upon their approval by the Commission or from the
date of filing with the said Commission if not acted upon within six (6) months from the
date of filing for a cause not attributable to the corporation.

Section 16. Grounds When Articles of Incorporation or Amendment May be

Disapproved. The Commission may disapprove the articles of incorporation or any
amendment thereto if the same is not compliant with the requirements of this
Code: Provided, That the Commission shall give the incorporators, directors, trustees,
or officers as reasonable time from receipt of the disapproval within which to modify the
objectionable portions of the articles or amendment. The following are ground for such
disapproval:

(a) The articles of incorporation or any amendment thereto is not substantially in

accordance with the form prescribed herein;

(b) The purpose or purposes of the corporation are patently unconstitutional,

illegal, immoral or contrary to government rules and regulations;

(c) The certification concerning the amount of capital stock subscribed and/or
paid is false; and

(d) The required percentage of Filipino ownership of the capital stock under
existing laws or the Constitution has not been complied with.
No articles of incorporation or amendment to articles of incorporation of banks, banking
and quasi-banking institutions, preneed, insurance and trust companies, NSSLAs,
pawnshops and other financial intermediaries shall be approved by the Commission
unless accompanied by a favorable recommendation of the appropriate government
agency to the effect that such articles or amendment is in accordance with law.

Section 17. Corporation Name. - No corporate name shall be allowed by the

Commission if it is not distinguishable from that already reserved or registered for the
use if another corporation, or if such name is already protected by law, rules and
regulations.

A name is not distinguishable even if it contains one or more of the following:

(a) The word "corporation", "company", incorporated", "limited", "limited liability",

or an abbreviation ofone if such words; and

(b) Punctuations, articles, conjunctions, contractions, prepositions, abbreviations,

different tenses, spacing, or number of the same word or phrase.

The Commission upon determination that the corporate name is: (1) not distinguishable
from a name already reserved or registered for the use of another corporation; (2)
already protected by law; or (3) contrary to law, rules and regulations, may summarily
order the corporation to immediately cease and desist from using such name and
require the corporation to register a new one. The Commission shall also cause the
removal of all visible signages, marks, advertisements, labels prints and other effects
bearing such coroporate name. Upon the approval of the new corporate name, the
Commission shall issue a certificate of incorporation under the amended name.

If the corporation fails to comply with the Commission's order, the Commission may hold
the corporation and its responsible directors or officers in contempt and/or hold them
administratively, civilly and/or criminally liable under this Code and other applicable laws
and/or revoke the registration of the corporation.

Section 18. Registration, Incorporation and Commencement of Corporation Existence. -

A person or group of persons desiring to incorporate shall submit the intended corporate
name to the Commission for verification. If the Commission finds that the name is
distinguishable from a name already reserved or registered for the use of another
corporation, not protected by law and is not contrary to law, rules and regulation, the
name shall be reserved in favor of the incorporators. The incorporators shall then
submit their articles of incorporation and bylaws to the Commission.

Section 21. Effects of Non-Use of Corporate Charter and Continous Inoperation. - If a

corporation does not formally organize and commence its business within five (5) year
from the date of its incorporation, its certificate of incorporation shall be deemed
revoked as of the day following the end of the five (5)-year period.
However, if a corporation has commence its business but subsequently becomes
inoperative for a period of at least five (5) consecutive years, the Commission may, after
due notice and hearing, place the corporation under delinquent status.

A delinquent corporation shall have a period of two (2) years to resume operations and
comply with all requirements that the Commission shall prescribed. Upon the
compliance by the corporation, the Commission shall issue an order lifting the
delinquent status. Failure to comply with the requirements and resume operations within
the period given by the Commission shall cause the revocation of the corporation's
certificate of incorporation.

The Commission shall give reasonable notice to, and coordinate with the appropriate
regulatory agency prior to the suspension or revocation of the certificate of incorporation
of companies under their special regulatory jurisdiction.

TITLE III
BOARD OF DIRECTORS/TRUSTEE AND OFFICERS

Section 22. The Board of Directors or Trustees of a Corporation; Qualification and

Term. - Unless otherwise provided in this Code, the board of directors or trustees shall
exercise the corporate powers, condict all business, and control all properties of the
corporation.

Directors shall be elected for a term of one (10 Year from among the holders of stocks
registered in the corporation's book while trustees shall be elected for a term not
exceeding three (3) years from among the members of the corporation. Each director
and trustee shall hold office until the successor is elected and qualified. A director who
ceases to own at least one (1) share of stock or a trustee who ceases to be a member
of the corporation shall cease to be such.

The board of the following corporations vested with public interest shall have
independent directors constituting at least twenty percent (20%) of such board:

(a) Corporations covered by Section 17.2 of Republic Act No. 8799, otherwise
known as "The Securities Regulation Code", namely those whose securities are
registered with the Commission, corporations listed with an exchange or with
assets of at least Fifty million pesos (50,000,000.00) and having two hundred
(200) or more holders of shares, each holding at least one hundred (100) shares
of a class of its equity shares;

(b) Banks and quasi-banks, NSSLAs, pawnshops, corporations engaged in

money service business, preneed, trust and insurance companies and other
financial intermediaries; and

(c) Other corporations engaged in businesses vested with public interest similar
to the above, as may be determined by the Commission, after taking into account
 relevant factors which are germane to the objective and purpose of requiring the
election of an independent director, such as the extent of minority ownership,
type of financial products or securities issued or offered to investors, public
interest involved in the nature of business operations, and other analogous
factors.

An independent director is a person who apart from shareholdings and fees received
from any business or other relationship which could, or could reasonable be received to
materially interfere with the exercise of independent judgment in carrying out the
responsibilities as a director.

Independent directors must be elected by the shareholders present or entitled to vote in

absentia during the election of directors. Independent directors shall be subject to rules
and regulations governing their qualifications, disqualifications, voting requirements,
duration of term and term limit, maximum number of board membership and other
requirements that the Commission will prescribed to strengthen their independence and
align with international best practices.

Section 23. Election of Directors or Trustees. - Except when the exclusive right is

reserved for holders of founders' shares under Section 7 of this Code, each stockholder
or member shall have the right to nominate any director or trustee who posseses all of
the qualifications and none of the disqualifications and none of the disqualifications set
forth in this Code.

At all elections of directors or trustees, there must be present, either in person or

through a representative authorized to act by written proxy, the owners of majority of the
outstanding capital stock, or if there be no capital stock, a majority of the members
entitled to vote. When so authorized in the bylaws or by a majority of the board of
directors, the stockholders or members may also vote through remote communication
or in absentia: Provided, That the right to vote through such modes may be exercised in
corporations vested with public interest, notwithstanding the absence of a provision in
the bylaws of such corporations.

A stockholder or member who participates through remote communication or in

absentia, shall be deemed present for purposes of quorum.

The election must be by ballot if requested by any voting stockholder or member.

In stock corporations, stockholders entitled to vote shall have the right to vote the
number of shares of stock standing in their own names in the stock books of the
corporation at the time fixed in the bylaws or where the bylaws are silent at the time of
the election. The said stockholder may: (a) vote such number of shares for as many
persons as there are directors to be elected; (b) cumulate said shares and give one (1)
candidate as many votes as the number of directors to be elected multiplied by the
number of shares owned; or (c) distribute them on the same principle among as many
candidates as may be seen fit: Provided, That the total number of votes cast shall not
exceed the number of shares owned by the stockholders as shown in the books of the
corporation multiplied by the whole number of directors to be elected: Provided,
however, That no delinquent stock shall be voted. Unless otherwise provided in the
articles of incorporation or in the bylaws, members of nonstock corporations may cast
as many votes as there are trustees to be elected by may not cast more than one (1)
vote for one (1) candidate. Nominees for directors or trustees receiving the highest
number of votes shall be declared elected.

If no election is held, or the owners of majority of the outstanding capital stock or

majority of the members entitled to vote are not present in person, by proxy, or through
remote communication or not voting in absentia at the meeting, such meeting may be
adjourned and the corporation shall proceed in accordance with Section 25 of this
Code.

The directors or trustees elected shall perform their duties as prescribed by law, rules of
good corporate governance, and bylaws of the corporation.

Section 24. Corporate Officers. - Immediately after their election, the directors of a

corporation must formally organize an elect: (a) a president, who must be a director; (b)
a treasurer, who must be a resident of the Philippines; and (d) such other officers as
may be provided in the bylaws. If the corporation is vested with public interest, the
board shall also elect compliance officer. The same person may hold two (2) or more
positions concurrently, except that no one shall act as president and secretary or as
president and treasurer at the same time, unless otherwise allowed in this Code.

The officers shall manage the corporation and perform such duties as may be provided
in the bylaws and/or as resolved by the board of directors.

Section 25. Report of Election of Directors, Trustees and Officers, Non-holding of

Election and Cessation from Office. - Within thirty (30) days after the election of the
directors, trustees and officers of the corporation, the secretary, or any other officer of
the corporation, the secretary, or any other officer of the corporation, shall submit to the
Commission, the names, nationalities, shareholdings, and residence addresses of the
directors, trustees and officers elected.

The non-holding of elections and the reasons therefor shall be reported to the
Commission within thirty (30) days from the date of the scheduled election. The report
shall specify a new date for the election, which shall not be later than sixty (60) days
from the scheduled date.

If no new date has been designated, or if the rescheduled election is likewise not held,
the Commission may, upon the application of a stockholder, member, director or
trustee, and after verification of the unjustifiable non-holding of the election, summarily
order that an election be held. The Commission shall have the power to issue such
orders as may be appropriate, including other directing the issuance of a notice stating
the time and place of the election, designated presiding officer, and the record date or
dates for the determination of stockholders or members entitled to vote.

Notwithstanding any provision of the articles of incorporation or by laws to the contrary,

the shares of stock or membership represented at such meeting and entitled to vote
shall constitute a quorum for purposes of conducting an election under this section.

Should a director, trustee or officer die, resign or in any manner case to hold office, the
secretary or the director, trustee or officer of the corporation, shall, within seven (7) days
form knowledge thereof, report in writing such fact to the Commission.

Section 26. Disqualification of Directors, Trustees or Officers. - A person shall be

disqualified from being a director, trustee or officer of any corporation if, within five (5)
years prior to the election or appointment as such, the person was:

(a) Convicted by final judgment:

(1) Of an offense punishable by imprisonment for a period exceeding six

(6) years;

(2) For violating this Code; and

(3) For violating Republic Act No. 8799, otherwise known as "The
Securities Regulation Code";

(b) Found administratively liable for any offense involving fraudulent acts; and

(c) By a foreign court or equivalent foreign regulatory authority for acts, violations
or misconduct similar to those enumerated in paragraphs (a) and (b) above.

The foregoing is without prejudice to qualifications or other disqualifications, which the

Commission, the primary regulatory agency, or Philippine Competition Commission may
impose in its promotion of good corporate governance or as a sanction in its
administrative proceedings.

Section 27. Removal of Director or Trustees. - Any director or trustee of a corporation

may be removed fro office by vote of the stockholders holding or representing at least
two-thirds (2/3) of the outstanding capital stock, or in a nonstock corporation, by a vote
of at least two-thirds (2/3) of the member entitled to vote: Provided, That such removal
shall take place either at a regular meeting of the corporation or at a special meeting
called for the purpose, and in either case, after previous notice to stockholders or
members of the corporation of the intention to propose such removal at the meeting. A
special meeting of the stockholders or members for the purpose of removing any
director or trustee must be called by the secretary on order of the president, or upon
written demand of stockholders representing or holding at least a majority of the
outstanding capital stock, or a majority of the members entitled to vote. If there is no
secretary, or the secretary, despite demand, fails or refuses to call the special meeting
or to give notice thereof, the stockholder or member of the corporation signing the
demand may call the special meeting or to give notice thereof, the stockholder or
member of the corporation signing the demand may call for the meeting by directly
addressing the stockholders or members. Notice of the time and place of such meeting,
as well as of the intention to propose such removal, must be given by publication or by
written notice prescribed in this Code. Removal may be with or without
cause: Provided, That removal without cause may not be used to deprive minority
stockholders or members of the right representation to which they may be entitled under
Section 23 of this Code.

The Commission shall, motu propio or upon verified complaint, and after due notice and
hearing, order the removal of a director or trustee elected despite the disqualification, or
whose disqualification arose or is discovered subsequent to an election. The removal of
a disqualified director shall be without prejudice to other sanctions that the Commission
may impose on the board of directors or trustees who, with knowledge of the
disqualification, failed to remove such director or trustee.

Section 28. Vacancies in the Office of Director or Trustee; Emergency Board. - Any

vacancy occurring in the board of directors or trustees other that by removal or
expiration of term may be filled by the vote of at least a majority of the remaining
directors or trustees, if still constituting a quorum; otherwise, said vacancies must be
filled by the stockholders or members in a regular or special meeting called for that
purpose.

When the vacancy is due to term expiration, the election shall be held no later that the
day of such expiration at a meeting called for that purpose. When the vacancy arises as
a result of removal by the stockholders or members, the election may be held on the
same day of the meeting authorizing the removal and this fact must be so stated in the
agenda and notice of said meeting. In all other cases, the election must be held no later
than forty-five (45) days from the time the vacancy arose. A director or trustee elected to
fill vacancy shall be referred to as replacement director or trustee elected to fill a
vacancy shall be referred to as replacement director or trustee and shall serve only for
the unexpired term of the predecessor in office.

However, when the vacancy prevents the remaining directors from consituting a quorum
and emergency action is required to prevent grave, substantial, and irreparable loss or
damage to the corporation, the vacancy may be temporarily filled from among the
officers of the corporation by unanimous vote of the remaining directors or trustees. The
action by the designated director or trustee shall be limited to the emergency action
necessary, and the term shall cease within a reasonable time form the termination of
the emergency or upon election of the replacement director or trustee, whichever comes
earlier. The corporation must notify the Commission within three (3) days from the
creation of the emergency board, stating therein the reason for its creation.
Any directorship or trusteeship to be filled by a reason of an increase in the number of
directors or trustees shall be filled only by an election at a regular or at a special
meeting of stockholders or members duly called for the purpose, or in the same meeting
authorizing the increase of directors or trustees if so stated in the notice of the meeting.

In all elections to fill vacancies under this section, the procedure set forth in Section 23
and 25 of this Code shall apply.

Section 30. Liability of Directors, Trustees or Officers. - Directors or trustees who

willfully and knowingly vote for or assent to patently unlawful acts of the corporation or
who are guilty of gross negligence or bad faith in directing the affairs of the corporation
or acquire any personal or pecuniary interest in conflict with their duty as such directors
or trustees shall be liable jointly and severally for all damages resulting therefrom
suffered by the corporation, its stockholders or members and other persons.

A director, trustee or officer shall not attempt to acquire, or any interest adverse to the
corporation in respect of any matter which has been reposed in them in confidence, and
upon which, equity imposes a disability upon themselves to deal in their own behalf;
otherwise, the said director, trustee or officer shall be liable as a trustee for the
corporation and must account for the profits which otherwise would have accrued to the
corporation.

Section 31. Dealings of Directors, Trustees or Officers with the Corporation. - A

contract of the corporation with one (1) or more of its directors, trustees, officers or their
spouses and relatives within the fourth civil degree of consanguinity or affinity is
voidable, at the option of such corporation, unless all the following conditions are
present:

(a) The presence of such director or trustee in the board meeting in which the
contract was approved was not necessary to constitute a quorum for such
meeting;

(b) The vote of such director or trustee was not necessary for the approval of the
contract;

(c) The contract is fair and reasonable under the circumstances;

(d) In case of corporations vested with public interest, material contracts are
approved by at least a majority of the independent directors voting to approved
the material contract; and

(e) In case of an officer, the contract has been previously authorized by the board
of directors.

Where any of the first three (3) conditions set forth in the preceding paragraph is
absent, in the case of a contract with a director or trustee, such contract may be ratified
by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding
capital stock or of at least two-thirds (2/3) of the members in a meeting called for the
purpose: Provided, That full disclosure of the adverse interest of the directors or
trustees involved is made at such meeting and the contract is fair and reasonable under
the circumstances.

Section 32. Contaracts Between Corporations with Interlocking Directors. - Except in

cases of fraud, and provided the contract is fair and reasonable under the
circumstances a contract between two (2) or more corporations having interlocking
directors shall not be invalidated on that ground alone: Provided, That if the interest of
the interlocking director in one (1) corporation is substantial and the interest in the other
corporation or corporations is merely nominal, the contract shall be subject to the
provisions of the preceding section insofar as the latter corporation or corporations are
concerned.

Stockholding exceeding twenty percent (20%) of the outstanding capital stock shall be
considered substantial for purposes of interlocking directors.

Section 33. Disloyalty of a Director. - Where a director, by virtue of such office, acquires

a business opportunity which should belong to the corporation, thereby obtaining profits
to the prejudice of such corporation, the director must account for and refund to the
latter all such profits, unless the act has been ratified by a vote of the stockholders
owning or representing at least two-thirds (2/3) of the outstanding capital stock. This
provision shall be applicable, nothwithstanding the fact that the director risked one's
own funds in the venture.

Section 34. Executive Management, and Other Special Committees. - If the bylaws so

provide, the board may create an executive committee composed of at least three (3)
directors. Said committee may act, by majority of vote of all its members, on such
specific matters within the competence of the board, as may be delegated to it in the
bylaws or by majority vote of the board, except with respect to the: (a) approval of any
action for which shareholders' approval is also required; (b) filing of vacancies in the
board; (c) amendment or repeal of bylaws or the adoption of new bylaws; (d)
amendment or term is not amendable or repealable; and (e) distribution of cash
divendends to the shareholders.

The board of directors may create special committees of temporary or permanent

nature and determine the members' term, composition, compensation, powers, and
responsibilities.

TITLE IV
POWERS OF THE CORPORATIONS

Section 35. Corporate Powers and Capacity. - Every corporation incorporated under

this Code has the power and capacity:
 (a) To sue and be sued in its corporate name;

(b) To have perpetual existence unless the certificate of incorporation provides

otherwise;

(c) To adopt and use a corporate seal;

(d) To amend its articles of incorporation in accordance with the provisions of this
Code;

(e) To adopt bylaws, not contrary to law, morals or public policy, and to amend or
repeal the same in accordance with this Code;

(f) In case of stock corporations, to issue or sell stocks to subscribers and to sell
treasury stocks in accordance with the provisions of this Code; and to admit
members to the corporation if it be a nonstock corporation;

(g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage, and otherwise deal with such real and personal property, including
securities and bonds of other corporations, as the transaction of the lawful
business of the corporation may reasonably and necessarily require, subject to
the limitations prescribed by law and the constitution;

(h) To enter into a partnership, joint venture, merger, consolidation, or any other
commercial agreement with natural and juridical persons;

(i) To make reasonable donations, including those for the public welfare or for
hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That
no foreign corporation shall give donations in aid of any political party or
candidate or for purpose s of partisan political activity;

(j) To establish pension, retirement, and other plans for the benefit of its
directors, trustees, officers, and employees; and

(k) To exercise such other powers as may be essential or necessary to carry out
its purpose or purposes as stated in the articles of incorporation.

Section 36. Power to Extend or Shorten Corporate Term. - A private corporation may

extend or shorten its term as stated in the articles of incorporation when approved by a
majority vote of the board of directors or trustees, and ratified at a meeting by the
stockholders or members representing at least two-thirds (2/3) of the outstanding capital
stock or of its membrs. Written notice of the proposed action and the time and place of
the meeting shall be sent to the stockholders or members at their respective place of
residence as shown in the books of the corporation, and must be deposited to the
addressee in the post office with postage prepaid, served personally, or when allowed in
the bylaws or done with the consent of the stockholder, sent electronically in
accordance with the rules and regulations of the Commission on the use of electronic
data messages. In case of extension of corporate term, a dissenting stockholder may
exercise the right of appraisal under the conditions provided in this Code.

Section 37. Power to increase or Decrease Capital Stock; Incur, Create or Increase

Bonded Indebtedness. - No corporation shall increase or decrease its capital stock or
incur, create or increase any bonded indebtedness unless approved by a majority vote
of the board of directors and by two-thirds (2/3) of the outstanding capital stock at a
stockholders' meeting duly called for the purpose. Written notice of the time and place of
the stockholders' meeting and the purpose for said meeting must be sent to the
stockholders at their places of residence as shown in the books of the corporation
served on the stockholders personally, or through electronic means recognized in the
corporation's bylaws and/or the Commission's rules as a valid mode for service of
notices.

A certificate must be signed by a majority of the directors of the corporation and

countersigned by the chairperson and secretary of the stockholders' meeting, setting
forth:

(a) That the requirements of this section have been complied with;

(b) The amount of the increase or decrease of the capital stock;

(c) In case of an increase of the capital stock, the amount of capital stock or
number of shares of no-par stock thereof actually subscribed, the names
nationalities and addresses of the persons subscribing, the amount of capital
stock or number of no-par stock subscribed, the names, nationalities and
addresses of the persons subscribing, the amount of capital stock or number of
no-par stock subscribed by each, and the amount paid by each on the
subscription in cash or property, or the amount of capital stock or number of
shares of no-par stock allotted to each stockholder if such increase is for the
purpose of making effective stock dividend therefor authorized;

(d) Any bonded indebtedness to be incurred, created ot increased;

(e) The amount of stock represented at the meeting; and

(f) The vote authorizing the increase or decrease of capital stock, or incurring,
creating or increasing of bonded indebtedness.

Any increase or decrease in the capital stock or the incurring, creating or increasing of
any bonded indebtedness shall require prior approval of the Commission and where
appropriate, of the Philippine Competition Commission. The application with the
Commission shall be made within six (6) months from the date of approval of the board
of directors and stockholders, which period may be extended for justifiable reasons.
Copies of the certificate shall be kept on file in the office of the corporation and filed with
the Commission and attached to the original articles of incorporation. After approval by
the Commission and the issuance by the Commission of its certificate of filing may
declare: Provided, That the Commission shall not accept for filing any certificate of
increase of capital stock unless accompanied by a sworn statement of the treasurer of
the corporation accompanied by a sworn statement of the treasurer of the corporation
lawfully holding office at the time of the filing of the certificate, showing that at least
twenty-five percent (25%) of the increase in capital stock has been subscribed and that
at least twenty-five percent (25%) of the amount subscribed has been paid in actual
cash to the corporation or that property, the valuation of which is equal to twenty-five
percent (25%) of the subscription, has been transferred to the corporation: Provided,
further, That no decrease in capital stock shall be approved by the Commission if its
effect shall prejudice the rights of corporate creditors.

Nonstock corporations may incur, create or increase bonded indebtedness when

approved by a majority of the board of trustees and of at least two-thirds (2/3) of the
members in a meeting duly called for the purpose.

Bonds issued by a corporation shall be registered with the Commission, which shall
have the authority to determine the sufficiency of the terms thereof.

Section 38. Power to Deny Preemptive Right. - All stockholders of a stock corporation

shall enjoy preemptive right to subscribe to all issues or disposition of shares of any
class, in proportion to their respective shareholdings, unless such right is denied by the
articles of incorporation or an amendment thereto: Provided, That such preemptive right
shall not extend to shares issued in compliance with laws requiring stock offerings or
minimum stock ownership by the public; or to shares issued in good faith with the
approval of the stockholders representing two-thirds (2/3) of the outstanding capital
stock in exchange for property needed for corporate purposes or in payment of
previously contracted debt.

Section 39. Sale or Other Disposition of Assets. - Subject to the provisions of Republic

Act No. 10667, otherwise known as the "Philippine Competition Act", and other related
laws a corporation may, by a majority vote of its board of directors or trustees, sell,
lease, exchange, mortgage, pledge, or otherwise dispose of its property and assets,
upon such terms and conditions and for such consideration, which may be money,
stock, bonds, or other instruments for the payment of money or other property or
consideration, as its board of directors or trustees may deem expedient.

A sale of all or substantially all of the corporation's properties and assets, including its
goodwill, must be authorized by the vote of stockholders representing at least two-thirds
(2/3) of the outstanding capital stock, or at least two-thirds (2/3) of the members,
meeting duly called for the purpose.
In nonstock corporations where there are no members with voting rights, the vote of at
least a majority of the trustees in office will be sufficient authorization for the corporation
to enter into any transaction authorized by this section.

The determination of whether or not the sale involves all or substantially all of the
corporation's properties and assets must be computed based on its net asset value, as
shown in its latest financial statemments. A sale or other disposition shall be deemed to
cover substantially all the corporate property and assets if thereby the corporation would
be rendered incapable of continuing the business or accomplishing the purpose of
which it was incorporated.

Written notice of the proposed action and of the time and place for the meeting shall be
addressed to stockholders or members at their places of residence as shown in the
books of the corporation and deposited to the addressee in the post office with postage
prepaid, served personally, or when allowed by the bylaws or done with the consent of
the stockholder, sent electronically: Provided, That any dissenting stockholder may
exercise the right of appraisal under the conditions provided in this Code.

After such authorization or approval by the stockholders or members, the board of

directors or trustees may, nevertheless, in its discretion, abandon such sale, lease,
exchange, mortgage, pledge, or other disposition of property and assets, subject to the
rights of third parties under any contract relating thereto, without further action or
approval by the stockholders or members.

Nothing in this section is intended to restrict the power of any corporation, without the
authorization by the stockholders or members, to sell, lease, exchange, mortgage,
pledge, or otherwise dispose of any of its property and assets if the same is necessary
in the usual and regular course of business of the corporation or if the proceeds of the
sale or other disposition of such property and assets shall be appropriated for the
conduct of its remaining business.

Section 40. Power to Acquire Own Shares. - Provided, That the corporation has

unrestricted retained earnings in its books to cover the shares to be purchased or
acquired, a stock corporation shall have the power to purchased or acquired, a stock
corporation shall have the power to purchase or acquire its own shares for a legitimate
corporate purpose or purposes, including the following cases:

(a) To eliminate fractional shares arising out of stock dividends;

(b) To collect or compromise an indebtedness to the corporation, arising out of

unpaid subscription, in a delinquency sale, and to purchase delinquent shares
sold during said sale; and

(c) To pay dissenting or withdrawing stockholders entitled to payment for their

shares under the provisions of this Code.
Section 41. Power to Invest Corporate Funds in Another Corporation or Business or for
Any Other Purpose. - Subject to the provisions of this Code, a private corporation may
invest its funds in any other corporation, business, or for any purpose other than the
primary purpose for which it was organized, when approved by a majority of the board
of directors or trustees and ratified by the stockholders representing at least two-thirds
(2/3) of the outstanding capital stock, or by at least two-thirds (2/3) of the outstanding
capital stock, or by at least two-thirds (2/3) of the members in the case of nonstock
corporations at a meeting duly called for the purpose. Notice of the proposed
investment and the time place of residence as shown in the books of the corporation
and deposited to the addressee in the post office with the postage prepaid. Served
personally, or sent electronically in accordance with the rules and regulations of the
Commission on the use of electronic data message, when allowed by the bylaws or
done with the consent of the stockholders: Provided, That any dissenting stockholder
shall have appraisal right as provided in this Code: Provided, however, That where the
investment by the corporation is reasonably necessary to accomplish its primary
purpose as stated in the articles of incorporation, the approval of the stockholders or
members shall not be necessary.

Section 42. Power to Declare Dividends. - The board of directors of a stock corporation

may declare dividends out of the unrestricted retained earnings which shall be payable
in cash, property, or in stock to all stockholders on the basis of outstanding stock held
by them: Provided, That any cash dividends due on delinquent stock shall be first be
applied to the unpaid balance on th subscription plus costs and expenses, while stock
holders until their unpaid subscription is fully paid: Provided, further, That no stock
dividend shall be issued without the approval of stockholders representing at least two-
thirds (2/3)of the outstanding capital stock at a regular or special meeting duly called for
the purpose.

Stock corporations are prohibited from restraining surplus profits in excess of one
hundred percent (100%} of their paid-in capital stock, except: (a) when justified by the
definite corporate expansion projects or programs approved by the board of directors; or
(b) when the corporation is prohibited under any loan agreement with financial
institutions or creditors, whether local or foreign, from declaring dividends without their
consent, and such consent has not yet been secured; or (c) when it can be clearly
shown that such retention is necessary under special circumstances obtaining in the
corporation, such as when there is need for special reserve for probable contingencies.

Section 43. Power to Enter into Management Contract. - No corporation shall conclude

a management contract with another corporation unless such contract is approved by
the board of directors and by the stockholders owning at least the majority of the
outstanding capital stock, or by at least a majority of the members in the case of a
nonstock corporation, or both the managing and the managed corporation, at a meeting
duly called for the purpose: Provided, That (a) where a stockholder or stockholders
representing the same interest of both the managing and the managed corporations
own or control more than one-third (1/3) of the total outstanding capital stock entitled to
vote of the managing corporation; or (b) where a majority if the members of the board of
directors of the managing corporation also constitute a majority of the members of the
board of directors of the managed corporation, then the management contract must be
approved by the stockholders of the managed corporation owning at least two-thirds
(2/3) of the total outstanding capital stock entitled to vote, or by at least two-thirds (2/3)
of the members in the case of a nonstock corporation.

These shall apply to any contract whereby a corporation undertakes to manage or

operate all or substantially all of the called services contracts, operating agreements or
otherwise: Provided, however, That such service contracts or operating agreements
which relate to the exploration, development exploitation or utilization of natural
resources may entered into such periods as may be provided by the pertinent laws or
regulations.

No management contracts shall be entered into for period longer that five (5) years for
any one term.

Section 44. Ultra Vires Acts of the Corporations. - No corporation shall possess or

exercise corporate powers other than those conferred by this Code or by its articles of
incorporation and except as necessary or incidental to the exercise of the powers
conferred.

TITLE V
BYLAWS

Section 45. Adoption of Bylaws. - For the adoption of bylaws by the corporation, the
affirmative vote of the stockholders representing at least a majority of the outstanding
capital stock, or of at least a majority of the members in case on nonstock corporations,
shall be necessary. The bylaws shall be signed by the stockholders or members voting
for them and shall be kept in the principal office of the corporation, subject to the
inspection of the stockholders or members during office hours. A copy thereof, duly
certified by a majority of the directors or trustees and countersigned by the secretary of
the corporation, shall be filed with the Commission and attached to the original articles
of incorporation.

Notwithstanding the provisions of the preceding paragraph, bylaws maybe adopted and
filed prior to incorporation; in such case, such bylaws shall be approved and signed by
all incorporators and submitted to the Commission, together with the articles of
incorporation.

In all cases, bylaws shall be effective only upon the issuance by the Commission of a
certification that the bylaws are in accordance with this Code.

The Commission shall not accept for filing the bylaws or any amendment thereto of any
bank, banking institution, building and loan association, trust company, insurance
company, public utility, educational institution, or any other corporations governed by
special laws, unless accompanied by a certificate of the appropriate government agency
to the effect that such by laws or amendments are in accordance with law.

Section 46. Contents of Bylaws. - A private corporation may provide the following in its
bylaws;

(a) The time, place and manner of calling and conducting regular or special
meetings of the directors or trustees;

(b) The time and manner of calling and conducting regular or special meetings
and mode of notifying the stockholders or members thereof;

(c) The required quorum in meetings of stockholders or members and the

manner of voting therein;

(d) The modes by which a stockholder, member, director or trustees may attend
meetings and cast their votes;

(e) The form for proxies of stockholders and members and the manner of voting
them;

(f) The directors' or trustees' qualifications, duties and responsibilities, the

guidelines for setting the compensation of directors or trustees and officers, and
the maximum number of other board representations that an independent
director or trustee may have which shall, in no case, be more than the number
prescribed by the Commission;

(g) The time for holding the annual election of directors or trustees and the mode
or manner of giving notice thereof;

(h)The manner of election or appointment and the term of officers other than
directors or trustees;

(i) The penalties for violation of the bylaws;

(j) In the case of stock corporations, the manner of issuing stock certificates; and

(k) Such other matters as may be necessary for the proper or convenient
transaction of its corporate affairs for the promotion of good governance and anti-
graft and corruption measures.

An arbitration agreement maybe provided in the bylaws pursuant to Section 181 of this
Code .

Section 47. Amendment to Bylaws. - A majority of the board of directors or trustees,

and the owners of at least a majority of the outstanding capital stock, or at least a
majority of the members of a nonstock corporation, at a regular or special meeting duly
called for the purpose, may amend or repeal the bylaws or adopt new bylaws. The
owner of two-thirds (2/3) of the outstanding capital stock or two-third (2/3) of the
members in a nonstock corporation mat delegate to the board of directors or trustees
the power to amend or repeal the bylaws or adopt new bylaws: Provided, That any
power delegated to the board of directors or trustee to amend or repeal the bylaws or
adopt new bylaws shall be considered as revoke whenever stockholders owning or
representing a majority of the outstanding capital stock or majority of the members shall
so vote at a regular or special meeting.

Whenever the bylaws are amended or new bylaws are adopted, the corporation shall
file with the Commission such amended or new bylaws and, if applicable, the
stockholders' or members' resolution authorizing the delegation of the power to amend
and/or adopt new bylaws, duly certified under oath by the corporate secretary and
majority of the directors or trustees.

The amended or new bylaws shall only be effective upon the issuance by the
Commission of certification that the same is in accordance with this Code and other
relevant laws.

TITLE VI
MEETINGS

Section 48. Kinds of Meetings. - Meeting of the directors, trustees, stockholders, or

members may be regular or special.

Section 49. Regular and Special Meetings of Stockholders or Members. - Regular

meetings of stockholders or members shall be held annually on a date fixed in the
bylaws, or if not so fixed in the bylaws, or if not so fixed, on any date After April 15 of
every year as determined by the board of directors or trustees: Provided, further, That
written notice of regular meetings may be sent to all stockholders or members of record
through electronic mail or such other manner as the Commission shall allow under its
guidelines.

At each regular meeting of stockholders or members, the board of directors or trustees

shall endeavor to present to stockholders or members the following:

(a) The minutes of the most recent regular meeting which shall include, among
others:

(1) A description of the voting and the vote tabulation procedures used in
the previous meetings;

(2) A description of the opportunity given to stockholders or members to

ask questions and record of the question s asked and answers given;
 (3) The matters discussed and resolutions reached;

(4) A record of the voting results for each agenda item;

(5) A list of the director or trustees, officers and stockholders or members

who attended the meeting; and

(6) Such other items that the Commission may require in the interest of
good corporate governance and protection of minority stockholders;

(b) A members' list for nonstock corporations and, for stock corporations, material
information on the current stockholders, and their voting rights;

(c) A detailed, descriptive, balanced and comprehensible assessment of the

corporation's performance, which shall include information on any material
change in the corporation's business strategy, and other affairs;

(d) A financial report for the preceding year, which shall include financial
statements duly signed and certified in accordance wit this Code and the rules
and the Commission may prescribe, a statement on the adequacy of the
corporation's internal controls or risk management systems, and a statement of
all external audit and non-audit fees;

(e) An explanation of the dividend policy and the fact of payment of dividends or
the reasons for nonpayment thereof;

(f) Director or trustee profiles which shall include, among others, their
qualifications and relevant experience, length of service in the corporation,
trainings and continuing education attended, and their board representation in
other corporations;

(g) A director or trustee attendance report, indicating the attendance of each of

the meetings of the board and its committees and in regular or special
stockholder meetings;

(h) Appraisals and performance reports for the board and the criteria and
procedure for assessment;

(i) A director or trustee compensation report prepared in accordance with this

Code and the rules the Commission may prescribe;

(j) Director disclosures on self-dealings and related party transactions; and/or

(k) The profiles of directors nominated ir seeking election or reelection.

A director, trustee, stockholder, or member may propose any other matter for inclusion
in the agenda at may regular meeting of stockholders or members.

Special meetings of stockholders or members shall be held at any time deemed

necessary or as provided in the bylaws: Provided, however, That at least one (1) week
written notice shall be sent to all stockholders or members, unless a different period is
provided in the bylaws, law or regulation.

A stockholder or member may propose the holding of a special meeting and items to be
included in the agenda.

Notice of any meeting may be waived, expressly or impliedly, by any stockholder or

member: Provided, That general waivers of notice in the articles of incorporation or the
bylaws shall not be allowed: Provided, further, That attendance at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened.

Whenever for any cause, there is no person authorized or the person authorized
unjustly refuses to call a meeting, the Commission, upon petition of a stockholder or
member on a showing of good cause therefor, may issue an order, directing the
petitioning stockholder or member to call a meeting of he corporation by giving proper
notice required by this Code or the bylaws. The petitioning stockholder or member shall
preside thereat until at least a majority of the stockholders or members present have
chosen from among themselves, a presiding officer.

Unless the bylaws provide for a longer period, the stock and transfer book or
membership book shall be closed at least twenty (20) days for regular meetings and
seven (7) days for special meetings before the scheduled sate of the meeting.

In case of postponement of stockholders' or members' regular meetings, written notice

thereof and the reason therefor shall be sent to all stockholders or members of record at
least two (2) weeks prior to the date of the meeting, unless a different period is required
under the bylaws, law or regulation.

The right to vote of stockholders or members may be exercised in person, through

remote communication or in absentia. The Commission shall issue the rules and
regulations governing participation and voting through remote communication or in
absentia, taking into account the company’s scale, number of stockholders or members,
structure, and other factors consistent with the protection and promotion of
shareholders' or members' meetings.

Section 50. Place and Time of Meetings of Stockholders or Members. - Stockholders'

or members' meetings, whether regular or special, shall be held in the principal office of
the corporation as set forth in the articles of incorporation, or if not practicable, in the
city or municipality where the principal office of the corporation is
located: Provided, That any city of municipality in Metro Manila, Metro Cebu, Metro
Davao, and other Metropolitan areas shall, for purposes of this section, be considered a
city or municipality.

Notice of meetings shall be sent through the means of communication provided in the
bylaws, which notice shall state the time, place and purpose of the meetings.

Each notice of meeting shall further be accompanied by the following:

(a) The agenda for the meeting;

(b) A proxy which shall be submitted to the corporate secretary within a

reasonable time prior to the meeting;

(c) When attendance, participation, and voting are allowed by remote

communication or in absentia, the requirements and procedures to be followed
when a stockholder or member elects either option; and

(d) When the meeting is for the election of directors or trustees, the requirements
and procedure for nomination and election.

All proceedings and any business transacted at a meeting of the stockholders or

members, if within the powers or authority of the corporation, shall be valid even if the
meeting is improperly held or called: Provided, That all the stockholders or members of
the corporation are present or duly represented at the meeting and not one of them
expressly states at the beginning of the meeting that the purpose of their attendance is
to object to the transaction of any business because the meeting is not lawfully called or
convened.

Section 51. Quorum in Meetings. - Unless otherwise provided in this Code or in the

bylaws, a quorum shall consist of the stockholders representing a majority of the
outstanding capital stock pr a majority of the members in the case of nonstock
corporations.

Section 52. Regular and Special Meetings of Directors or Trustees; Quorum. - Unless

the articles of incorporation or the bylaws provides for a greater majority, a majority of
the directors or trustees as stated in the articles of incorporation shall constitute a
quorum to transact corporate business, and every decision reached by at least a
majority of the directors or trustees constituting a quorum, except for the election of
officers which shall require the vote of a majority of all the members of the board, shall
be valid as a corporate act.

Regular meetings of the board of directors or trustees of every corporation shall be held
monthly, unless the bylaws provide otherwise.
Special meetings of the board of directors or trustees may be held at any time upon the
call of the president or as provided in the bylaws.

Meetings of directors or trustees of corporations may be held anywhere in or outside the

Philippines, unless the bylaws provide otherwise. Notice of regular or special meetings
stating the date, time and place of the meeting must be sent to every director or trustee
at least two (2) days prior to the scheduled meeting, unless a longer time is provided in
the bylaws. A director or trustee may waive this requirement, either expressly or
impliedly.

Directors or trustees who cannot physically attend or vote at board meetings can
participate and vote through remote communication such as videoconferencing,
teleconferencing, or other alternative modes of communication that allow them
reasonable opportunities to participate. Directors or trustees cannot attend or vote by
proxy at board meetings.

A director or trustee who has a potential interest in any related party transaction must
recuse from voting on the approval of the related party transaction without prejudice to
compliance with the requirments of Section 31 of this Code.

Section 53. Who Shall Preside at Meetings. - The chairman or, in his absence, the
president shall preside at all meetings of the directors or trustees as well as of the
stockholders or members, unless the bylaws provide otherwise.

Section 54. Right to Vote of Secures Creditors and Administrators. - In case a

stockholder grants security interest in his or her shares in stock corporations, the
stockholder-grantor shall have the right to attend and vote at meetings of stockholders,
unless the secured creditor is expressly given by the stockholder-grantor such right in
writing which is recorded in the appropriate corporate books.

Executors, administrators, receivers, and other legal representatives duly appointed by

the court may attend and vote on behalf of the stockholders or members without need of
any written proxy.

Section 55. Voting in Case of Joint Ownership of Stock. - The consent of all the co-
owners shall be necessary in voting shares of stock owned jointly by two (2) or more
persons, unless there is a written proxy, signed by all the co-owners, authorizing one (1)
or some of them or any other person to vote such share or shares: Provided, That when
the shares are owned in an "and/or" capacity by the holders thereof, any one of the joint
owners can vote said shares or appoint a proxy therefor.

Section 56. Voting Right for Treasury Shares. - Treasury shares shall have no voting
right as long as such shares remain in the Treasury.

Section 57. Manner of Voting; Proxies. - Stockholders and members may vote in

person or proxy in all meetings of stockholders or members
When so authorized in the bylaws or by a majority of the board of directors, the
stockholders or members of corporations may also vote through remote communication
or in absentia: Provided, That the votes are received before the corporation finishes the
tally of votes.

A stockholder or member who participates through remote communication or in

absentia shall be deemed present for purposes of quorum.

The corporation shall establish the appropriate requirements and procedures for voting
through remote communication and in absentia, taking into account the company's
scale, number of shareholders or members, structure and other factors consistent with
the basic right of corporate suffrage.

Proxies shall be in writing, signed and filed, by the stockholder or member, in any form
authorized in the bylaws and received by the corporate secretary within a reasonable
time before the scheduled meeting. Unless otherwise provided in the proxy form, it shall
be valid only for the meeting for which it is intended. No proxy shall be valid and
effective for a period longer than five (5) years at any one time.

Section 58. Voting Trusts. - One or more stockholders of stock corporation may create
a voting trust for the purpose of conferring upon a trustee or trustees the right to vote
and other rights pertaining to the shares for a period not exceeding five (5) years at any
time: Provided, That in the case of a voting trust specially required as a condition in a
loan agreement, said voting trust may be for a period exceeding five (5) years but shall
automatically expire upon full payment of the load. A voting trust agreement must be in
writing and notarized, and shall specify the terms and conditions thereof.

A certified copy of such agreement shall be filed with the corporation and with the
Commission; otherwise, the agreement is ineffective and uneforceable. The certificate
or certificates of stock covered by the voting trust agreement shall be cancelled and
new ones shall be issued pursuant to said agreement. The books of the corporation
shall state that the transfer in the name of the trustee or trustees is made pursuant to
the voting trust agreement.

The trustee or trustees shall execute and deliver to the transferors, voting trust
certificates, which shall be transferable in the same manner and with the same effect as
certificates of stock.

The voting trust agreement filed with the corporation shall be subject to examination by
any stockholder of the corporation in the same manner as any other corporate book or
record: Provided, That both the trustor and the trustee or trustees may exercise the right
of inspection of all corporate books and records in accordance with the provisions of this
Code.
Any other stockholder may transfer the shares to the same trustee or trustees upon the
term and conditions stated in the voting trust agreement, and thereupon shall be bound
by all the provisions of said agreement.

No voting trust agreement shall be entered into for purposes of circumventing the laws
against anti-competitive agreements, abuse of dominant position, anti-competitive
mergers and acquisitions, violation of nationality and capital requirements, or for the
perpetuation of fraud.

Unless expressly renewed, all rights granted in a voting trust agreement shall
automatically expire at the end of the agreed period. The voting trust certificates as well
as the certificate of stock in the name of the trustees shall thereby be deemed cancelled
and new certificates of stock shall be reissued in the name of the trustors.

The voting trustee or trustees may vote by proxy or in any manner authorized under the
bylaws unless the agreement provides otherwise.

TITLE VII
STOCKS AND STOCKHOLDERS

Section 59. Subscription Contract. - Any contract for the acquisition of unissued stock
in an existing corporation or a corporation still to be formed shall be deemed a
subscription within the meaning of this Title, notwithsatnding the fact that the parties
refer to it as a purchase or some other contract.

Section 60. Pre-incorporation Subscription. - A subscription of shares in a corporation

till to be formed shall be irrevocable for a period of at least six (6) months from the date
of subscription, unless all of the other subscribers consent to the revocation, or the
corporation fails to incorporate wuthin the same period or within a longer period
stipulated in the contract of subscription. No pre-incorporation is submitted to the
Commission .

Section 61. Consideration for Stocks. - Stocks shall not be issued for a consideration
less than the par or issued price thereof. Consideration for the issuance of stock may
be:

(a) Actual cash paid to the corporation;

(b) Property, tangible or intangible, actually received by the corporation and

necessary or convenient for its use and lawful purposes at a fair valuation equal
to the par or issued value of the stock issued;

(c) Labor performed for or services actually rendered to the corporation;

(d) Previously incurred indebtedness of the corporation;

 (e) Amounts transferred from unrestricted retained earnings to stated capital;

(f) Outstanding shares exchanged for stocks in the event of reclassification or

conversion;

(g) Shares of stock in another corporation; and/or

(h) Other generally accepted form of consideration.

Where the consideration is other than actual cash, or consists of intangible property
such as patents or copyrights, the valuation thereof shall initially be determined by the
stockholders or the board of directors, subject to the approval of the Commission.

Shares of stock shall not be issued in exchange for promissory notes or future service.
The same considerations provided in this section, insofar as applicable, may be used
for the issuance or bonds by the corporation.

The issued price of no-par value shares may be fixed in the articles of incorporation or
by the board of directors pursuant to authority conferred by the articles of incorporation
or the bylaws, or if not so fixed, by the stockholders representing at least a majority of
the outstanding capital stock at a meeting duly called for the purpose.

Section 62. Certificate of Stock and Transfer of Shares. - The capital stock of

corporations shall be divided into shares for which certificates signed by the president or
vice president, countersigned by the secretary or assistant secretary, and sealed with
the seal of the corporation shall be issued in accordance with the bylaws. Shares of
stock so issued are personal property and may be transferred by delivery of the
certificate or certificates indorsed by the owner, his attorney-in-fact, or any other person
legally authorized to make the transfer. No transfer, however, shall be valid, except as
between the parties, until the transfer is recorded in the books of the corporation
showing the names of the parties to the transaction, the date of the transfer, the number
of the certificate or certificates, and the number of shares transferred. The Commission
may require corporations whose securities are traded in trading markets and which can
reasonably demonstrate their capability to do so to issue their securities or shares of
stocks in uncertificated or scripless form in accordance with the rules of the
Commission.

No shares of stock against which the corporation holds any unpaid claim shall be
transferable in the books of the corporation.

Section 63. Issuance of Stock Certificates. - No certificate of stock shall be issued to a

subscriber until the full amount of subscription together with interest and expenses (in
case of delinquent shares), if any is due, has been paid.

Section 64. Liability of Directors for Watered Stocks. - A director or officer of a

corporation who: (a) consents to the issuance of stocks for a consideration less than its
par or issued value: (b) consents to the issuance of stocks for the consideration other
than cash, valued in excess of its fair value; or (c) having knowledge of the insufficient
consideration, does not file written objection with the corporate secretary, shall be liable
to the corporation or its creditors, solidarily with the stockholder concerned for the
differnce between the value receive at the time of issuance of the stock and the par or
issued value of the same.

Section 66. Payment of Balance of Subscription. - Subject to the provisions of the

subscription contract, the board of directors may, at any time, declare due and payable
to the corporation unpaid subscription and may collect the same or such percentage
thereof, in either case, with accrued interest, if any, as it may dem necessary.

Payment of unpaid subscription or any percentage thereof, together with any interest
accrued, shall be made on the date specified in the subscription contract or on the date
stated in the call made by the board. Failure to pay on such date shall render the entire
balance due and payable and shall make the stockholder liable for interest at the legal
rate on such balance, unless a different interest at the legal rate on such balance,
unless a different interest rate is provided in the subscription contract. The interest shall
be computed from the date specified, until full payment of the subscription. If no
payment is made within thirty (30) days from the said sate, all stocks covered by the
subscription shall thereupon become delinquent and shall be subject to sale as
hereinafter provided, unless the board of directors orders otherwise.

Section 67. Delinquency Sale. - The board of directors may, by resolution, order the
sale of delinquent stock and shall specifically state the amount due on each subscription
plus all accrued interest, and the date, time and place of the sale which shall not be less
than thirty (30) days nor more than sixty (60) days from the date the stock become
delinquent.

Notice of the salem, with a copy of the resolution, shall be sent to every delinquent
stockholder either personally, by registered mail, or through other means provided in the
bylaws. The same shall be published once a week for two (2) consecutive weeks in
newspaper of general circulation in the province or city where the principal office of the
corporation is located.

Unless the delinquent stockholder pays to the corporation, o or before the date specified
for the sale of the delinquent stock, the balance due on the former's subscription, plus
accrued interest, costs of advertisement and expenses of sale, or unless the board of
directors otherwise orders, said delinquent stock shall be sold at a public auction to
such bidder who shall offer to pay the full amount of the balance on the subscription
together with accrued interest, costs of advertisement and expenses of sale, for the
smallest number of shares or fraction of a share. The stock so purchased shall be
transferred to such purchaser in the books of the corporation and a certificate for such
stock shall be issued in the purchaser's favor. The remaining shares, if any, shall be
credited in favor of the delinquent stockholder who shall likewise be entitled to the
issuance of a certificate of stock covering such shares.
Should there be no bidder at the public auction who offers to pay the full amount of the
balance on the subscription together with accrued interest, costs of advertisement, and
expenses of sale, for the smallest number of shares or fraction of a share, the
corporation may, subject to the provisions of this Code, bid for the same, and the total
amount due shall be credited as fully paid in the books of the corporation. Title to all the
shares of stock covered by the subscription shall be vested in the corporation as
treasury shares and may be disposed of by said corporation in accordance with the
provisions of this Code.

Section 68. When Sale May be Questioned. - No action to recover delinquent stock

sold can be sustained upon the ground of irregularity or defect in the notice of sale, or in
the sale itself of the delinquent stock, unless the party seeking to maintain such action
first pays or tenders to the party holding the sum for which the same was sold with
interest from the date of sale at the legal rate. No such action shall be maintained
unless a complaint is filed within six (6) months from the date of sale.

Section 69. Court Action to Recover Unpaid Subscription. - Nothing in this Code shall
prevent the corporation fro collecting through court action, the amount due on any
unpaid subscription, with accrued interest, costs and expenses.

Section 70. Effect of Delinquency. - No delinquent stock shall be voted for, be entitled

to vote, or be represented at any stockholder's meeting, nor shall the holder thereof be
entitled to any of the rights of a stockholder except the right to dividends in accordance
with the provisions of this Code, until and unless payment is made by the holder of such
delinquent stock for the amount due on the distribution with accrued interest, and the
costs and expenses of advertisement, if any.

Section 71. Rights of Unpaid Shares, Nondelinquent. - Holders of subscribed shares

not fully paid which are not delinquent shall have all the rights of a stockholder.

Section 72. Lost or Destroyed Certificates. The following procedure shall be followed by

a corporation in issuing new certificates of stock in lieu of those which have been lost,
stolen or destroyed:

(a) The registered owner of a certificate of stock in a corporation or such person's legal
representative shall file with the corporation an affidavit in triplicate setting forth, if
possible, the circumstances as to how the certificate was lost, stolen or destroyed, the
number of shares represented by such certificate, the serial number of the certificate
and the name of the corporation which issued the same. The owner of such certificate
of stock shall also submit such other information and evidence as may be deemed
necessary; and

(b) After verifying the affidavit and other information and evidence with the books of the
corporation shall publish a notice in a newspaper of general circulation in the place
where the corporation has its principal office, once a week for three (3) consecutive
weeks at the expense of the registered owner of the certificate of stock which has been
lost, stolen or destroyed. The notice shall state the name of the corporation, the name of
the registered owner, the serial number of the certificate, the number of shares
represented by such certificate, and shall state that after the expiration of one (1) year
from the date of the last publication, if no contest has been presented to the corporation
regarding the certificate of stock, the right to make such contest shall be barred and the
corporation shall cancel the lost, destroyed or stolen certificate of stock, the right to
make such contest shall be barred and the corporation shall cancel the lost, destroyed
or stolen certificate of stock in its books. In lieu thereof, the corporation shall issue a
new certificate of stock, unless the registered owner files a bond or other security as
may be required, effective for a period of one (1) year, for such amount and in such
form and with such sureties as may be satisfactory to the board of directors, in which
case a new certificate may be issued even before the expiration of one (1) year period
provided herein. If a contest has been presented to the corporation or if an action is
pending in court regarding the ownership of the certificate of stock which has been lost,
stolen in lieu thereof shall be suspended until the court renders a final decision
regarding the ownership of the certificate of stock which has been lost, stolen ore
destroyed.

Except in case of fraud, bad faith, or negligence on the part of the corporation and its
officers, no action may be brought against any corporation which shall have issued
certificate of stock in lieu of those lost, stolen or destroyed pursuant to the procedure
above-described.

TITLE VIII
CORPORATE BOOKS AND RECORDS

Section 73. Books to be Kept; Stock Transfer Agent. - Every corporation shall keep and
carefully preserve at its principal office all information relating to the corporation
including, but not limited to:

(a) The articles of incorporation and bylaws of the corporation and all their
amendments;

(b) The current ownership structure and voting rights of the corporation, including
lists of stockholders or members group structures, intra-group relations,
ownership data, and beneficial ownership.

(c) The names and addresses of all the members of the board of directors or
trustees and the executive officers;

(d) A record of all business transactions;

(e) A record of the resolutions of the board of directors or trustees and of the
stockholders or members;
 (f) Copies of the latest reportorial requirements submitted to the Commission;
and

(g) The minutes of all meetings of stockholders or members, or of the board of

directors or trsutees. Such minutes shall set forth in detail among others; the time
and the place of the meeting held, how it was authorized, the notice given, the
agenda therefor, whether the meeting was regular or special, its object if special,
those present and absent, and every act done or ordered done at the meeting.
Upon the demand of a director trustee, stockholder or member, the time when
any director, trustee, stockholder or member entered or left the meeting must be
noted in the minutes; and on a similar demand, the yeas and nays must be taken
on any motion or proposition, and a record thereof carefully made. The protest of
a director, trustee, stock holder or member on any action or proposed action
must be recorded in full upon their demand.

Corporate records, regardless of the form in which they are stored, shall be open to
inspection by any director, trustee, stockholder or member of the corporation in person
or by a representative at reasonable hours on business days, and a demand in writing
may be made by such director, trustee or stockholder at their expense, for copies of
such records or excerpts from said records. The inspecting or reproducing party shall
remain bound by confidentiality rules under prevailing laws, such as the rules on trade
secrets or processes under Republic Act No. 8293, otherwise known as the "Intellectual
Property Code of the Philippines", as amended, Republic Act No. 10173, otherwise
known as the "Data Privacy Act of 2012" Republic Act No. 8799, otherwise known as
"The Securities Regulation Code", and the Rules of Court.

A requesting party who is not a stockholder or member of record, or is a competitor,

director, officer, controlling stockholder or otherwise represents the interests of a
competitor shall have no right to inspect or demand reproduction of corporate records.

Any stockholder who shall abuse the rights granted under this section shall be
penalized under Section 158 of this Code, without prejudice to the provisions of
Republic Act No. 8293, otherwise known as the "Intellectual Property Code of the
Philippines", as amended, and Republic Act No. 10173, otherwise known as the "Data
Privacy Act of 2012".

Any officer or agent of the corporation who shall refuse to allow the inspection and/or
reproduction of records in accordance with the provisions of this Code shall be liable to
such director, trustee, stockholder or member for damages, and in addition, shall be
guilty of an offense which shall be punishable under Section 161 of this
Code: Provided, That if such refusal is made pursuant to a resolution or order of the
board of directors or trustees, the liability under this section for such action shall be
imposed upon the directors or trustees who voted for such refusal: Provided,
further,That it shall be a defense to any action under this section that the person
demanding to examine and copy excerpts from the corporation's record or minutes of
such corporation or of any other corporation, or was not acting in good faith or of any
other corporation or was not acting in good faith or for a legitimate purpose in making
the demand to examine or reproduce corporate records or is a competitor, director,
officer, controlling stockholder or otherwise represents the interest of a competitor.

If the corporation denies or does not act on a demand for inspection and/or
reproduction, the aggrieved party may report such denial or inaction to the Commission
Within five (5) days from receipt of such report, the Commission shall conduct a
summary investigation and issue an order directing the inspection or reproduction of the
requested records.

Stock corporations must also keep a stock and transfer book, which shall contain a
record of all stocks in the names of the stockholders alphabetically arranged; the
installments paid and unpaid on all stocks for which subscription has been made, and
the date of payment of any installment; a statement of every alienation, sale or transfer
of stock made, the date thereof, by and to whom made; and such other entries as the
bylaws may prescribed, The stock and transfer book shall be kept in the principal office
of the corporation or in the office of its stock transfer agent and shall be open or
inspection by any director or stockholder of the corporation at reasonable hours on
business days.

A stock transfer agent or one engaged principally in the business of registering transfers
of stocks in behalf of a stock corporation shall be allowed to operate in the Philippines
upon securing a license from the Commission and the payment of a fee to be fixed by
the Commission, which shall be renewable annually: Provided, That a stock corporation
is not precluded from performing or making transfer of its own stocks, in which case all
the rules and regulations imposed on stock transfer agents, except the payment of a
license fee herein provided, shall be applicable: Provided, further, That the Commission
may require stock corporations which transfer and/or trade stocks in secondary markets
to have an independent transfer agent.

Section 74. Right to Financial Statements. - A corporation shall furnish a stockholder or

member, within ten (10) days from receipt of their written request, its most recent
financial statement, in the form and substance of the financial reporting required by the
Commission.

At the regular meeting of stockholders or members, the board of directors or trustees

shall present to such stockholders or members a financial report of the operations of the
corporation for the preceding year, which shall include financial statements, duly signed
and certified in accordance with this Code, and the rules the Commission may
prescribe.

However, if the total assets or total liabilities of the corporation are less than Six
hundred thousand pesos (₱600,000.00), or such other amount as may be determined
appropriate by the Department of Finance, the financial statements may be certified
under oath by the treasurer and the president.
TITLE IX

MERGER AND CONSOLIDATION

Section 75. Plan of Merger or Consolidation. - Two (2) or more corporations may merge
into a single corporation which shall be one of the constituents corporations or may
consolidate into a new single corporation which shall be the consolidated corporation.

The board of directors or trustees of each corporation, party to the merger or

consolidation, shall approved a plan of merger or consolidation, shall approved a plan of
merger or consolidation, shall approve a plan of merger or consolidation setting forth the
following:

(a) The names of the corporations proposing to merge or consolidate hereinafter

referred to as the constituent corporations;

(b) The terms of the merger or consolidation and the mode of carrying the same
into effect;

(c) A statement of the changes, if any, in the articles of incorporation of the

surviving corporation in case of merger; and, in case of consolidation, all the
statements required to be set forth in the articles of incorporation for corporations
organized under this Code; and

(d) Such other provisions with respect to the proposed merger or consolidation
as are deemed necessary or desirable.

Section 76. Stockholders' or Members' Approval. - Upon approval by a majority vote of

each of the board of directors or trustees of the constituent corporations of the plan of
merger or consolidation, the same shall be submitted for approval by the stockholders
or members of each of such corporations at separate corporate meetings duly called for
the purpose. Notice of such meetings shall be given to all stockholders or members of
the respective corporations in the same manner as giving notice of regular or special
meetings under Section 49 of this Code. The notice shall state the purpose of the
meeting and include a copy or a summary of the plan of merger or consolidation.

The affirmative vote of stockholders representing at least two-thirds (2/3) of the

outstanding capital stock of each corporation in the case of stock corporations or at
least two-thirds (2/3) of the members in the case of nonstock corporations shall be
necessary for the approval of such plan. Any dissenting stockholder may exercise the
right of appraisal in accordance with this Code: Provided, That if after the approval by
the stockholders of such plan, the board of directors decides to abandon the plan, the
right of appraisal shall be extinguished.

Any amendment to the plan of merger or consolidation may be made: Provided, That

such amendment is approved by a majority vote of the respective boards of directors or
trustees of all the constituents corporations and ratified by the affirmative vote of
stockholders representing at least two-thirds (2/3) of the outstanding capital stock or of
two-thirds (2/3) of the members of each of the constituents corporations. Such plan,
together with any amendment, shall be considered as the agreement of merger or
consolidation.

Section 77. Articles of Merger or Consolidation. - After the approval by the stockholders

or members as required by the preceding section, articles of merger or articles of
consolidation shall be executed by each of the constituent corporations, to be signed by
the president or vice president and certified by the secretary or assistant secretary of
each corporation setting forth

(a) The plan of the merger or the plan of consolidation;

(b) As to stock corporations, the number of shares outstanding, or in the case of

nonstock corporations, the number of members;

(c) As to each corporation, the number of shares or members voting for or

against such plan, respectively;

(d) The carrying amounts and fair values of the assets and liabilities of the
respective companies as of the agreed cut-off date;

(e) The method to be used in the merger or consolidation of accounts of the

companies;

(f) The provisional or pro forma values, as merged or consolidated, using the
accounting method; and

(g) Such other information as may be prescribed by the Commission.

Section 78. Effectivity of Merger or Consolidation. - The articles of merger or of

consolidation, signed and certified as required by this Code, shall be submitted to the
Commission for its approval: Provided, That in the case of merger or consolidation of
banks or banking institutions, loan associations, trust companies, insurance companies,
public utilities, educational institutions, and other special corporations governed by
special laws, the favorable recommendation of the appropriate government agency shall
first be obtained. If the Commission is satisfied that the merger or consolidation of the
corporations concerned is consistent with the provisions of this Code and existing laws,
it shall issue a certificate approving the articles and plan or merger or of consolidation,
at which time the merger or consolidation shall be effective.

If upon investigation, the Commission has reason to believe that the proposed merger
or consolidation is contrary to or inconsistent with he provisions of this Code or existing
laws, it shall set a hearing to give the corporations concerned the opportunity to be
heard. Written notice of the date, time, and place of hearing shall be given to each
constituent corporation at least two (2) weeks before said hearing. The Commission
shall thereafter proceed as provided in this Code.

Section 79. Effects of Merger or Consolidation. - The merger of consolidation shall

have the following effects:

(a) The constituent corporations shall become a single corporation shall become
a single corporation which, in case of merger, shall be the surviving corporation
designated in the plan of merger; and in case of consolidation, shall be the
consolidated corporation designated in the plan of consolidation;

(b) The separate existence of the constituent corporations shall cease, except
that of the surviving or the consolidated corporation;

(c) The surviving or the consolidated corporation shall possess all the right,
privileges, immunities and franchises of each constituent corporation; and all real
or personal property, all receivables due on whatever account, including
subscriptions to shares and other choses in action, and every other interest of,
belonging to, or due to each constituents corporation, shall be deemed
transferred to and vested in such surviving or consolidated corporation as though
such surviving or consolidated corporation had itself incurred such liabilities or
obligations; and any pending claim, action or proceeding brought by or against
any constituent corporation may be prosecuted by or against the surviving or
consolidated corporation. The rights of creditors or liens upon the property of
such constituent corporations shall not be impaired by the merger or
consolidation.

TITLE X

APPRAISAL RIGHT

Section 80. When the Right of Appraisal May Be Exercised. - Any stockholder of a

corporation shall have the right to dissent and demand payment of the fair value of the
shares in the following instances:

(a) In case an amendment to the articles of incorporation has the effect of

changing or restricting the rights of any stockholder or class of shares, or of
authorizing preferences in any respect superior to those of outstanding shares of
any class, or of extending or shortening the term of corporate existence;

(b) In case of sale, lease, exchange, transfer, mortgage, pledge or other

disposition of all or substantially all of the corporate property and assets as
provided in this Code;

(c) In case of merger or consolidation; and

 (d) In case of investment of corporate funds for any purpose other than the
primary purpose of the corporation.

Section 81. How Right is Exercised. - The dissenting stockholder who votes against a
proposed corporate action may exercise the right of appraisal by making a written
demand on the corporation for the payment of the fair value of shares held within thirty
(30) days from the date on which the vote was taken: Provided, That failure to make the
demand within such perios shall be deemed a waiver of the appraisal right. If the
proposed corporate action is implemented, the corporation shall pay the stockholder,
upon surrender of the certificate or certificates of stock representing the stockholder's
shares, the fair value thereof as of the day before the vote was taken excluding any
appreciation or depreciation in anticipation of such corporate action.

If, within sixty (60) days form the approval of the corporate action by the stockholders,
the withdrawing stockholder and the corporation cannot agree on the fair value of the
shares, it shall be determined and appraised by three (3) disinterested persons, one of
whom shall be named by the stockholder, another by the corporation and the third by
the two (2) thus chosen. The findings of the majority of the appraisers shall be final, and
their award shall be paid by the corporation within thirty (30) days after such award is
made: Provided, That no payment shall be made to any dissenting stockholder or
unless the corporation has unrestricted retained earnings in its books to cover such
payment: Provided, further, That upon payment by the corporation of the agreed or
awarded price, the stockholder shall forthwith transfer the shares to the corporation.

Section 82. Effect of Demand and Termination of Right. - From the time of demand for
payment of the fair value of a stockholder's shares until either the abandonment of the
corporate action involved or the purchase of the said shares by the corporation, all
rights accruing to such shares, including voting and dividend rights shall immediately be
restored.

Section 83. When Right to Payment Ceases. - No demand for payment under this Title
may be withdrawn unless the corporation consents thereto. If, however, such demand
for payment is withdrawn with the consent of the corporation, or if the proposed
corporate action is abandoned or rescinded by the corporation or disapproved by the
Commission where such approval is necessary, or if the Commission where such
stockholder is not entitled to the appraisal right, then the right of the stockholder to be
paid the fair value of the shares shall cease, the status as the stockholder shall be
restored, and all dividend distributions which would have accrued on the shares shall be
paid to the stockholder.

Section 84. Who Bears Costs of Appraisal. - The costs and expenses of appraisal shall
be borne by the corporation, unless the fair value ascertained by appraisers is
approximately the same as the price which the corporation may have offered to pay the
stockholder, in which the corporation may have offered to pay the stockholder, in which
case they shall be borne by the latter. In the case of an action to recover such fair value,
all costs and expenses shall be assessed against the corporation, unless the refusal of
the stockholder or receive payment was unjustified.

Section 85. Notation on Certificates; Rights of Transferee. - Within ten (10) days after
demanding payment for shares held, a dissenting stockholder shall submit the
certificates of stock representing the shares to the corporation for notation that such
representing the shares to the corporation for notation that such shares are dissenting
shares. Failure to do so shall, at the option of the corporation, terminate the rights under
this Title. If shares represented by the certificates bearing such notation are transferred,
and the certificates consequently cancelled, the rights of the transferor as a dissenting
stockholder under this Title shall cease and the transferee shall have all the rights of a
regular stockholder; and all dividend distributions which would have accrued on such
shares shall be paid to the transferee.

TITLE XI
NONSTOCK CORPORATION

Section 86. Definition. - For purposes of this Code and subject to its provisions on
dissolution, a nonstock corporation is one where no part of its income is distributable as
dividends to its members, trustees, or officers: Provided, That any profit which a
nonstock corporation may obtain incidental to its operations shall, whenever necessary
or proper, be used for the furtherance of the purpose of purposes for which the
corporation was organized, subject to the provisions of this Title.

The provisions governing the stock corporations, when pertinent, shall be applicable to
nonstock corporations except as may be covered by specific provisions of this Title.

Section 87. Purposes. - Nonstock corporations may be formed or organized for

charitable, religious, educational, professional, cultural, fraternal, literary, scientific,
social, civic service, or similar purposes. like trade industry, agricultural and like
chambers, or any combination thereof, subject to the special provisions of this Title
governing particular classes of nonstock corporations.

CHAPTER I
MEMBERS

Section 88. Right to Vote. - The right of the members of any class or classes to vote
may be limited, broadened, or denied to the extent specified in the articles of
incorporation or the bylaws. Unless so limited, broadened, or denied, each member,
regardless of class, shall be entitled to one (1) vote.

Unless otherwise provided in the articles of incorporation or the bylaws, a member may
vote by proxy, in accordance with the provisions of this Code. The bylaws may likewise
authorize voting through remote communication and/or in absentia.
Section 89. Nontransferability of Membership. - Membership in a nonstock corporation
and all rights arising therefrom are personal and nontransferable, unless the articles of
incorporation or the bylaws otherwise provide.

Section 90. Termination of Membership. - Membership shall be terminated in the

manner and for the cause provided in the articles of incorporation or the bylaws.
Termination of membership shall extinguish all rights of a member in the corporation or
in its property, unless otherwise provided in the articles of incorporation or the bylaws.

CHAPTER II
TRUSTEES AND OFFICERS

Section 91. Election and Term of Trustees. - The number of trustees shall be fixed in
the articles of incorporation or bylaw which may or may not be more than fifteen (15).
They shall hold office for not more than three (3) years until their successors are elected
and qualified. Trustees elected to fill vacancies occurring before the expiration of a
particular term shall hold office for the unexpired period.

Except with respect to independent trustees of nonstock corporation shall be elected as

trustee.

Unless otherwise provided in the articles of incorporation or the bylaws, the members
may directly elect officers of a nonstock corporation.

Section 92. List of Members and Proxies, Place of Meetings. - The corporation shall, at
all times, keep a list of its members and their proxies of record twenty (20) days prior to
any scheduled election. The bylaws may provide that the members of a nonstock
corporation may hold their regular or special meetings at any place even outside the
place where the principal office of the corporation is located: Provided, That proper
notice is sent to all members indicating the date, time, and place of meeting: Provided,
further, That the place of meeting shall be within the Philippine territory.

CHAPTER III
DISRIBUTION OF ASSETS IN NONSTOCK CORPORATIONS

Section 93. Rules of Distribution. - The assets of a nonstock corporation undergoing

the process of dissolution for reasons other than those set forth in Section 139 of this
Code shall be applied and distributed as follows:

(a) All liabilities and obligations of the corporation shall be paid, satisfied and
discharged, or adequate provision shall be made therefor:

(b) Assets held by the corporation upon a condition requiring return, transfer or
conveyed in accordance with such requirements;
 (c) Assets received and held by the corporation subject to limitations permitting
their use only for charitable religious, benevolent, educational or similar purpose,
but not held upon a condition requiring return, transfer or conveyance by reason
of the dissolution, shall be transferred or conveyed to one (1) or more
corporations, societies or organizations engaged in activities in the Philippines
substantially similar to those of the dissolving corporation according to a plan of
distribution adopted pursuant to this Chapter;

(d) Assets other than those mentioned in the preceding paragraphs, if any, shall
be distributed in accordance with the provisions of the articles of incorporation or
the bylaws, to the extent that the articles of incorporation or the bylaws extent
that the articles of incorporation or the bylaws determine the distributive rights of
members, or any class or classes of members, or provide for distribution; and

(e) In any other case, assets may be distributed to such person, societies,
organizations or corporations, whether or not organized for profit, as may be
specified in a plan of distribution adopted pursuant to this Chapter.

Section 94. Plan of Distribution of Assets. - A plan providing for the distribution of

assets, consistent with the provisions of this Title, may be adopted by a nonstock
corporation in the process of dissolution in the following manner:

(a) The board of trustees shall, by majority vote, adopt a resolution

recommending a plan of distribution and directing the submission thereof to a
vote at a regular or special meeting of members having voting rights;

(b) Each member entitled to vote shall be given a written notice setting forth the
proposed plan of distribution or summary thereof and the date, time and place of
such meeting within the time and in the manner provided in this Code for the
giving of notice of meetings; and

(c) Such plan of distribution shall be adopted upon approval of at least two-thirds
(2/3) of the members having voting rights present or represented by proxy at
such meeting.

TITLE XII
CLOSE CORPORATIONS

Section 95. Definition and Applicability of Title. - A close corporation, within the

meaning of this Code, is one whose articles of incorporation provides that: (a) all the
corporation's issued stock of all classes, exclusive of treasury shares, shall be held of
record by not more than a specified number of persons, not exceeding twenty (20); (b)
all the issued stock of all classes shall be subject to one (1) or more specified
restrictions on transfer permitted by this Title; and (c) the corporation shall not list in any
stock exchange or make any public offering of its stocks of any class. Nothwithstanding
the foregoing, a corporation shall not be deemed a close corporation when at least two-
thirds (2/3) of its voting stock or voting rights is owned or controlled by another
corporation which is not a close corporation within the meaning of this Code.

Any corporation may be incorporated as a close corporation, except mining or oil

companies, stock exchanges, banks, insurance companies, public utilities, educational
institutions and corporations declared to be vested with public interest in accordance
with the provisions of this Code.

The provisions of this Title shall primarily govern close corporations: Provided, That

other Titles shall primarily govern close corporations: Provided, That other Titles in this
Code shall apply suppletorily, except as otherwise provided under this Title.

Section 96. Articles of Incorporation. - The articles of incorporation of a close

corporation may provide for:

(a) A classification of shares or rights, the qualifications for owning or holding the
same, and restictions on their transfers, subject to the provisions of the following
section;

(b) A classification of director into one (1) or more classes, each of whom may be
voted for and elected solely by a particular class of stock; and

(c) Greater quorum or voting requirements in the meetings of stockholders or

directors than those provided in this Code.

The articles of incorporation of a close corporation may provide that the business of the
corporation may provide that the business of the corporation shall be managed by the
stockholders of the corporation rather than by a board of directors. So long as this
provision continues in effect, no meeting of stockholders need be called to elect
directors: Provided, That the stockholders of the corporation shall be deemed to be
directors for the purpose of applying the provisions of this Code, unless the context
clearly requires otherwise: Provided, further, That the stockholders of the corporation
shall be subject to all liabilities of directors.

The articles of incorporation may likewise provide that all officers ro employees or that
specified officers or employees shall be elected or appointed by the stockholders,
instead of by the board of directors.

Section 97. Validity of Restrictions on Transfer of Shares. - Restrictions on the right to

transfer shares must appear in the articles of incorporation, in the bylaws, as well as in
the certificate of stock; otherwise, the same shall not be binding on any purchaser in
good faith. Said restrictions shall not more onerous than granting the existing
stockholders or the corporation the option to purchase the shares of the transferring
stockholder may sell their shares to any third person.

Section 98. Effects if Issuance or Transfer of Stock in Breach of Qualifying Conditions. -

 (a) If a stock of a close corporation is issued or transferred to any person who is
not eligible to be a holder thereof under any provision of the articles of
incorporation, and if the certificate for such stock conspicuously shows the
qualifications of the persons entitled to be holders of record thereof, such person
is conclusively presumed to have notice of the fact of the ineligibility to be a
stockholder.

(b) If the articles of incorporation of a close corporation states the number of

persons, not exceeding twenty (20), who are entitled to be stockholders of
record, and if the certificate for such stock conspicuously states such number,
and the issuance or transfer of stock to any person would cause the stock to be
held by more than such number of persons, the person to whom such stock is
issued of transferred is conclusively presumed to have notice of this fact.

(c) If a stock certificate of a close corporation conspicuously shows a restriction

on transfer of the corporation has been issued or transferred has or is
conclusively presumed to have notice of the fact that the stock in violation of
such restriction, the transferee is conclusively presumed to have notice of the
fact that the stock was acquired in violation of the restriction.

(d) Whenever a person to whom stock of a close corporation has been issued or
transferred has or is conclusively presumed under this section to have notice of:
(1) the person's ineligibility to be a stockholder of the corporation; or (2) that the
transfer of stock would cause the stock of the corporation to be held by more
than the number of persons permitted under its articles of incorporation ; or (3)
that the transfer violates a restriction on transfer of stock, the corporation may, at
its option, refuse to register the tansfer in the name of the transferee.

(e) The provisions of subsection (d) shall not be applicable if the transfer of stock,
though contrary to subsections (a), (b) or (c), has been consented to by all
stockholders of the close corporation, or if the close corporation has amended its
articles of incorporation in accordance with this Title.

(f) The term "transfer", as used in this section, is not limited to a transfeer for
value.

(g) The provisions of this section shall not impair any right which the transferee
may have to either rescind the transfer or recover the stock under any express or
implied warranty.

Section 99. Agreements by Stockholders. -

(a) Agreements duly signed and executed by and among all stockholders before
the formation and organization of a close corporation shall survive the
incorporation and shall continue to be valid and binding between such
stockholders, if such be their intent, to the extent that such agreements are
 consistent with the articles of incorporation, irrespective of where the provisions
of such agreements are contained except those required by this Title to be
embodied in said articles of incorporation.

(b) A written agreement signed by two (2) or more stockholders may provide that
in exercising any voting right, the shares held by them shall be voted as provided
or as agreed, or in accordance with a procedure agreed upon by them.

(c) No provision in a written agreement signed by the stockholders, relating to

any phase of corporate affairs, shall be invalidated between the parties on the
ground that its effect is to make them partners among themselves.

(d) A written agreement among some or all the stockholders in a close

corporation shall not be invalidated on the ground that it relates to the conduct of
the business and affairs of the corporation as to restrict or interfere with the
discretion or powers of the board of directors: Provided, That such agreement
shall impose on the stockholders who are parties thereto the liabilities for
managerial acts imposed on directors by this Code.

(e) Stockholders actively engaged in the management or operation of the

business and affairs of a close corporation shall be held to strict fiduciary duties
to each other and among themselves. The stockholders shall be personally liable
for corporate torts unless the corporation has obtained reasonably adequate
liability insurance.

Section 100. When a Board Meeting is Unnecessary or Improperly Held. - Unless the

bylaws provide otherwise, any action taken by the directors of a close corporation
without a meeting called properly and with due notice shall nevertheless be deemed
valid if:

(a) Before or after such action is taken, a written consent thereto is signed by all
the directors; or

(b) All the stockholders have actual or implied knowledge of the action and make
no prompt objection in writing; or

(c) The directors are accustomed to take informal action with the express or
implied acquiescence of all the stockholders; or

(d) All the directors have express or implied knowledge of the action in question
and none of them makes prompt objection in writing.

An action within the corporate powers taken at a meeting held without proper call or
notice is deemed ratified by a director who failed to attend, unless after having
knowledge thereof, the director promptly files his written objection with the secretary of
the corporation.
Section 101. Preemptive Right in Close Corporations. - The preemptive right of
stockholders in close corporations shall extend to all stock to be issues, including
reissuance of services, or in payment or corporate debts, unless the article s of
incorporation provide otherwise.

Section 102. Amendment of Articles of Incorporation. - Any amendment to the articles

of incorporation which seeks to delete or remove any provision required by this Title or
to reduce a quorum or voting requirement stated in said articles of incorporation shall
require affirmative vote of at least two-thirds (2/3) of the outstanding capital, whether
with or without voting rights, or of such greater proportion of shares as may be
specifically provided in the articles of incorporation for amending, deleting or removing
any of the aforesaid provisions, at a meeting duly called for this purpose.

Section 103. Deadlocks. Nowithstanding any contrary provision in the close

corporation's articles of incorporation, bylaws, or stockholders' agreement, if the
directors or stockholders are so divided on the management of the corporation's
business and affairs that the votes required for a corporate action canot be obtained,
with the consequence that the business and affairs that the votes required for that the
business of the corporation can lo longer be conducted to the advantage of the
stockholders generally, the Commission, upon written petition by any stockholder, shall
have the power to arbitrate the dispute. In the exercise o such power, the Commission
shall have authority to make appropriate orders, such as: (a) cancelling or altering any
provision contained in the articles of incorporation, bylaws, ot any stockholders'
agreement; (b) cancelling, altering or enjoining a resolution or act of the corporation or
its board of directors, stockholders, officers, or other person party to the action; (d)
requiring the purchase at their fair value of shares of any stockholder, either by the
corporation regardless of the availability or unrestricted retained earnings in its, books
or by the other stockholder; (e) appointing a provisional director; (f) dissolving the
corporation; or (g) granting such other relief as the circumstances may warrant.

A provisional director shall be an impartial person who is neither a stockholder nor a

creditor of the corporation or any of its subsidiaries or affiliates, and whose further
qualifications, if any, may be determined by the Commission. A provisional director is
not a receiver of the corporation and does not have the title and powers of a custodian
or receiver. A provisional director shall have all the rights and powers of a duly elected
director, including the right to be notified of and to vote at meetings of directors until
removed by order of the Commission pr by all the stockholders. The compensation of
the provisional director shall be determined by agreement between such provisional
director and the corporation.

Section 104. Withdrawal of Stockholder or Dissolution of Corporation. - In addition and

without prejudice to other rights and remedies available under this Title, any stockholder
of a close corporation may, for any reason, compel the corporation to purchase shares
held at fair value, which shall not be less than the par or issued value, when the
corporation has sufficient assets in its books to cover its debts and liabilities exclusive of
capital stock: Provided, That any stockholder of a close corporation may, by written
petition to the Commission, compel the dissolution of such corporation whenever any
acts of the directors, officers or those in control whenever any acts of the directors,
officers, or those in control of the corporation are illegal, fraudulent, dishonest,
oppressive or unfairly prejudicial to the corporation or any stockholder, or whenever
corporate assets are being misapplied or wasted.

TITLE XIII

SPECIAL CORPORATIONS

CHAPTER I
EDUCATIONAL CORPORATIONS

Section 105. Incorporation. - Education corporations shall be governed by special laws

and by the general provisions of this Code.

Section 106. Board of Trustees. - Trustees of educational institutions organized as

nonstock corporations shall not be less than five (5) nor more than fifteen
(15): Provided, That the number of trustees shall be in multiples of five (5).

Unless otherwise provided in the articles of incorporation or bylaws, the board of

trustees of incorporated schools, colleges, or other institutions of learning shall, as soon
as organized, so classify themeselves that the term of office of one-fifth (1/5) of their
number shall expire every year. Trustees thereafter elected to fill vacancies, occurring
before the expiration of a particular term shall hold office only for the unexpired period.
Trustees elected thereafter to fill vacancies caused by expiration of term shall hold
office for five (5) years. A majority of the trustees shall constitute a quorum for the
transaction of business. The powers and authority of trustees shall be defined in the
bylaws.

For institutions organized as stock corporations, the number and term of directors shall
be governed by the provisions on stock corporations.

CHAPTER II
RELIGIOUS CORPORATIONS

Section 107. Classes of Religious Corporations. - Religious corporations may be

incorporated by one (1) or more persons. Such corporations may be classified into
corporations sole and religious societies.

Religious corporations shall be governed by this Chapter and by the general provisions
on nonstock corporations insofar as applicable.

Section 108. Corporation Sole. - For the purpose of administering and managing, as

trustee, the affairs, property and temporalities of any religious denomination, sect or
church, a corporation sole may be formed by the chief archbishop, bishop, priest,
minister, rabbi, or other presiding elder of such religious denomination, sect or church.

Section 109. Articles of Incorporation. - In order to become a corporation sole, the chief

archbishop, bishop, priest, minister, rabbi, or presiding elder of any religious
denomination, sect or church must file with the Commission articles of incorporation
setting forth the following:

(a) That the applicant chief archbishop, bishop, priest. Minister, rabbi, or
presiding elder represents the religious denomination, set or church which
desires to become a corporation sole;

(b) That the rules, regulations and discipline of the religious denomination, sect
or church are consistent with becoming a corporation sole and do not forbid it;

(c) That such chief archbishop, bishop, priest, minister, rabbi or presiding elder is
charged with the administration of the temporalities and the management of the
affairs, estate and properties of the religious denomination, sect or church within
the territorial jurisdiction, so described succinctly in the articles of incorporation;

(d) The manner by which vacancy occurring in the office of chief archbishop,
bishop, priest, rabbi or presiding elder is required to be filled, according to the
rules, regulations or discipline of the religious denomination, sect or church; and

(e) The place where the principals office of the corporation sole is to be
established and located, which place must be within the territory of the
Philippines.

The articles of incorporation may include any other provisions not contrary to law for the
regulation of the affairs of the corporation.

Section 110. Submission of the Articles of Incorporation. - The articles of the

incorporation must be verified, bu affidavit or affirmation of the chief archbishop, bishop,
priest, minister, rabbi, presiding elder, as the case may be, and accompanied by a copy
of the commission, certificate of election or letter of appointment of such chief
archbishop, bishop, priest, minister, rabbi or presiding elder, as the case may be, and
accompanied by a copy of the commission, certificate of election or letter of
appointment of such chief archbishop, bishop, priest, minister, rabbi, or presiding elder,
duly certified to be correct by any notary public.

From and after filing with the Commission of the said articles of incorporation, verified
by affidavit or affirmation, and accompanied by the documents mentioned in the
preceding paragraph, such chief archbishop, bishop, priest, minister, rabbi, or presiding
elder shall become a corporation sole and all temporalities, estate and properties of the
religious denomination, sect or church theretofore administered or manage as such
chief archbishop, bishop, priest, minister, rabbi, or presiding elder shall be personally
held in trust as a corporation sole, for the use, purpose, exclusive benefit and on behalf
of the religious denomination, sect or church, including hospitals, schools, colleges,
orphan asylums parsonages, and cemeteries thereof.

Section 111. Acquisition and Alienation of Property. - A corporation sole may purchase

and hold real estate and personal property for each church, charitable, benevolent, or
educational purposes, and may received bequests or gifts for such purposes. Such
corporation may sell or mortgage real property held by it by obtaining an order for that
purpose from the Regional Trial Court of the province where the property is situated
upon proof that the notice of the application for leave to sell or mortgage has been
made through publication or as directed by the Court, and that it is in the interest of the
corporation that leave to sell or mortgage be granted. The application for leave to sell or
mortgage must be made by petition, duly verified, by the chief archbishop, bishop,
priest, minister, rabbi, or presiding elder acting as corporation sole, and may be
opposed by any member of the religious denomination, sect or church represented by
the corporation sole: Provided, That in cases where the rules, regulations, and discipline
of the religious denomination, set or church, religious society, or colder concerned
represented by such corporation sole regulate the method of acquiring, holding, selling,
and mortgaging real estate and personal property, such rules, regulations and discipline
shall govern, and the intervention of the courts shall not be necessary.

Section 112. Filling of Vacancies. - The successor in the office of any chief archbishop,
bishop, priest, minister, rabbi, or presiding elder in a corporation sole shall become the
corporation sole on their accession to office and shall be permitted to transact business
as such upon filing a copy of their commission, certificate of election, or letters of
appointment, duly certified by any notary public with the Commission.

During any vacancy in the office of chief archbishop, bishop, priest, minister, rabbi, or
presiding elder of any donomination, sect or church incorporated as a corporate sole,
the person or persons authorized by the rules, regulations or discipline of the religious
denomination, sect or church represented by the corporation sole to administer the
temporalities and manage the affairs, estate, and properties of the corporation sole shall
exercise all the powers and authority of the corporation sole during such vacancy.

Section 113. Dissolution. - A corporation sole may be dissolve and its affairs settled
voluntarily by submitting to the Commission a verified declaration of dissolution, setting
forth:

(a) The name of the corporation;

(b) The reason of dissolution and winding up;

(c) The authorization for the dissolution of the corporation by the particular
religious denomination, sect or church; and
 (d) The names and addresses of the persons who are to supervise the winding
up of the affairs of the corporation.

Upon approval of such declaration of dissolution by the Commission, the corporation

shall cease to carry on its operations except for the purpose of winding up its affairs.

Section 114. Religious Societies. - Unless forbidden by the competent authority, the

Constitution, pertinent, rules, regulations, or discipline of the religious denomination,
sect or church of which it is part, any religious society, religious order, diocese, or
synod, or district organization of any religious denomination, sect or church, may, upon
written consent and/or by an affirmative vote at a meeting called for the purpose of at
least two-thirds (2/3) of its membership, incorporate for the administration of its
temporalities or for the management of its affairs, properties, and estate by filing the
management of its affairs, properties, and estate by filing with the Commission, articles
of incorporation verified by the affidavit of the presiding elder, secretary, or clerk or other
member of such religious society or religious denomination, sect or church, setting forth
the following:

(a) That the religious society or religious order, or diocese, synod, or district
organization is a religious organization of religious denomination, sect or church;

(b) That at least two-thirds (2/3) of its membership has given written consent or
has voted to incorporate, at a duly convened meeting of the body;

(c) That the incorporation of the religious society or religious order, or diocese,
synod, or district organization is not forbidden by competent, authority or by the
Constitution, rules, regulations or discipline of the religious denomination, sect or
church of which it forms part;

(d) That the religious society or religious order, or diocese, synod, or district
organization desires to incorporate for the administration of its affairs, properties
and estate;

(e) The place within the Philippines where the principal office of the corporation is
to be established and located; and

(f) The names, nationalities, and residence addresses of the trustees, not less
than five (5) no more than fifteen (15), elected by the religious society or religious
order, or the diocese, synod or district organization to serve for the first year or
such other period as may be prescribed by the laws of the religious society or
religious order, or of the diocese, synod, or district organization.

CHAPTER III
ONE PERSON CORPORATIONS
Section 115. Applicability of Provisions to One Person Corporations. - The provisions of
this Title shall primarily apply to One Person Corporations. Other provisions of this Code
apply suppletory, except as otherwise provided in this Title.

Section 116. One Person Corporation. - A One Person Corporation is a corporation

with a single stockholder: Provided, That only a natural person, trust, or an estate may
form a One Person Corporation.

Banks and quasi-banks, preneed, trust, insurance, public and publicly-listed companies,
and non-chartered government-owned and -controlled corporations may not incorporate
as ONe Person Corporations: Provided, further, That a natural person who is licensed
to exercise a profession may not organize as a One Person Corporation for the purpose
of exercising such profession except as otherwise provided under special laws.

Section 117. Minimum Capital Stock Not Required for One Person Corporation. - A
One Person Corporation shall not be required to have a minimum authorized capital
stock except as otherwise provided by special law.

Section 118. Articles of Incorporation. A One Person Corporation shall file articles of

incorporation in accordance with the requirements under Section 14 of this Code. It
shall likewise substantially contain the following:

(a) If the single stockholder is a trust or an estate, the name, nationality, and
residence of the trustee, administrator, executor, guardian, conservator,
custodian, or other person exercising fiduciary duties together with the proof of
such authority to act on behalf of the trust or estate; and

(b) Name, nationality, residence of the nominee and alternate nominee, and the
extent, coverage and limitation of the authority.

Section 119. Bylaws. - The One Person Corporation is not required to submit and file
corporate bylaws.

Section 120. Display of Corporate Name. - A One Person Corporation shall indicate the
letters "OPC" either below or at the end of its corporate name.

Section 121. Single Stockholder as Director, President. - The single stockholder shall

be the sole director and president of the One Person Corporation.

Section 122. Treasurer, Corporate Secretary, and Other Officers. - Within fifteen (15)
days from the issuance of its certificate or incorporation, the One Person Corporation
shall appoint a treasurer, corporate secretary, and other officers as it may deem
necessary, and notify the Commission thereof within five (5) days from appointment.

The single stockholder may not be appointed as the corporate secretary.

A single stockholder who is likewise the self-appointed treasurer of the corporation shall
give a bond to the Commission in such a sum as may be required: Provided, That the
said stockholder/treasurer shall undertake in writing to faithfully administer the One
person Corporation's funds to be received as treasurer, and to disburse and invest the
same according to the articles of incorporation as approved by the Commission. The
bond shall be renewed every two (2) years or as often as may be required.

Section 123. Special Functions of the Corporate Secretary. - In addition to the functions

designated by the One Person Corporation, the corporate secretary shall:

(a) Be responsible for maintaining the minutes book and/or records of the
corporation;

(b) Notify the nominee or alternate nominee of the death or incapacity of the
single stockholder, which notice shall be given no later than five (5) days from
such occurrence;

(c) Notify the Commission of the death of the single stockholder within five (5)
days from such occurrence and stating in such notice he names, residence
addresses, and contact details of all known legal heirs; and

(d) Call the nominee or alternate nominee and the known legal heir to meeting
and advise the legal heirs with regard to, among others, the election of a new
director, amendment of the articles of incorporation, and other ancillary and/or
consequential matters.

Section 124. Nominee and Alternate Nominee. - The single stockholder shall designate
a nominee and an alternate nominee who shall, in the event of the single stockholder's
death or incapacity, take the place of the single stockholder as director and shall
manage the corporation's affairs.

The articles of incorporation shall state the names, residence addresses and contact
details of the nominee and alternate nominee, as well as the extent and limitations of
their authority in managing the affairs of the One Person Corporation until the
stockholder, by self determination, regains the capacity to assume such duties.

In case of death or permanent incapacity of the single stockholder, the nominee shall
sot as director and manage the affairs of the One Person Corporation until the legal
heirs of the single stockholder have been lawfully determined, and the heors have
designated one of them or have agreed that the estate shall be the single stockholder of
the One Person Corporation.

The alternate nominee shall sit as director and manage the One Person Corporation in
case of the nominee's inability, incapacity, death, or refusal to discharge the functions
as director and manager of the corporation, and only for the same term and under the
same conditions applicable to the nominee.
Section 126. Change of Nominee or Alternate Nominee. - The singe stockholder may,
at any time, change its nominee and alternate nominee by submitting to the
Commission the names of the new nominees and their corresponding written consent.
For this purpose, the articles of incorporation need not be amended.

Section 127. Minute Book. - A One Person Corporation shall maintain a minutes book
which shall contain all actions, decisions, and resolutions taken by the One Person
Corporation.

Section 128. Records in Lieu of Meetings. - When action is needed on any matter, it

shall be sufficient to prepare a written resolution, signed and dated by the single
stockholder; and recorded in the minutes book of the One Person Corporation. The date
of recording in the minutes for all purposes under this Code.

Section 129. Reportorial Requirements. - The One Person Corporation shall submit the
following within such period as the Commission may prescribe:

(a) Annual financial statements audited by an independent certified public

accountant: Provided, That if the total assets or total liabilities of the corporation
are less than Six hundred thousand pesos (₱600,000.00), the financial
statements shall be certified under oath by the corporation's treasurer and
president;

(b) A report containing explanations or comments by the president on every

qualification, reservation, or adverse remark or disclaimer made by the auditor in
the latter's report;

(c) A disclosure of all self-dealings and related party transactions entered into
between the One Person Corporation and the single stockholder; and

(d) Other reports as the Commission may require.

For the purpose of this provision, the fiscal year of a One Person Corporation shall be
that set forth in its articles of incorporation or, in the absence thereof, the calendar year.

The Commission may place the corporation fail to submit the reportorial requirements
three (3) times, consecutively or intermittently, within a period of five (5) years.

Section 130. Liability of Single Shareholder. - A sole shareholder claiming limited

liability has the burden of affirmatively showing that the corporation was adequately
financed.

Where the single stockholder cannot prove that the property of the One Person
Corporation is independent of the stockholder's personal property, the stockholder shall
be jointly and severally liable for the debts and other liabilities of the One Person
Corporation.
The principles of piercing the corporate veil applies with equal force to One Person
Corporations as with other corporations.

Section 131. Conversion from an Ordinary Corporation to a One Person

Corporation. When a single stockholder acquires all the stocks of an ordinary stock
corporation, the later may apply for conversion into a One Person Corporation, subject
to the submission of such documents as the Commission may require. If the application
for conversion is approved, the Commission shall issue a certificate of filing of amended
articles of incorporation reflecting the conversion. The One Person Corporation
converted from an ordinary stock corporation shall succeed the later and be legally
responsible for all the latter's outstanding liabilities as of the date of conversion.

Section 132. Conversion from One Person Corporation to an Ordinary Stock

Corporation. - A One Person Corporation may be converted into an ordinary stock
corporation after due notice to the Commission of such fact and of the circumstances
leading to the conversion, and after compliance with all other requirements for stock
corporations under this Code and applicable rules. Such notice shall be filed with the
Commission within sixty (60) days from the occurrence of the circumstances leading to
the conversion into an ordinary stock corporation. If all requirement a have been
complied with, the Commission shall issue a certificate of filing or amended articles of
incorporation reflecting the conversion.

In case of death if the single stockholder, the nominee or alternate nominee shall
transfer the shares to the duly designated legal heir or estate within seven (7) days from
receipt of either an affidavit of heirship or self-adjudication executed by a sole heir, or
any other legal document declaring the legal heirs of the single stockholder and notify
the Commission of the transfer. Within sixty (60) days from the transfer of the shares,
the legal heirs shall notify the Commission of their decision to either wind up and
dissolve the One Person Corporation or convert it into an ordinary stock corporation.

The ordinary stock corporation converted from One Person Corporation shall succeed
the latter and be legally responsible for all the latter's outstanding liabilities as of the
date of conversion.

Section 173. Outstanding Capital Stock Defined. - The term "outstanding capital stock",
as used in this Code, shall mean the total shares of stock issued under binding
subscription contracts to subscribers or stockholders, whether fully or partially paid,
except treasury shares.